Pricing of end-of-life items with obsolescence
Originally published in the Proceedings of the 2006 IEEE International Symposium on Electronics and the Environment, San Francisco, CA, May 8-11, 2006 (CD-ROM)
Variability in the inflow of end-of-life (EOL) products and fluctuating inventory levels often make the processing of EOL products an economically risky operation for product recovery facilities (PRFs). Choosing an appropriate pricing policy can enhance the performance of PRFs by methodically clearing their inventory and increasing profits. This work presents two pricing models to counter the prospect of product obsolescence that can happen either gradually or suddenly. Product obsolescence can cause demand drop and inventory pile up, both of which could dent the revenues of PRFs. In the first model, gradual obsolescence and environmental regulations that limit the disposal quantity in landfills are considered. In the second model, the case of sudden obsolescence is addressed. Examples are presented to illustrate the pricing strategies for each model.
Srikanth Vadde, Sagar V. Kamarthi, and Surendra M. Gupta. "Pricing of end-of-life items with obsolescence" Mechanical and Industrial Engineering Faculty Publications (2006).
Available at: http://works.bepress.com/skamarthi/13