Here is an approach for analyzing the value of a core entering the remanufacturing plant.The used product (CV) should be valued as the market value of the remanufactured
product (MVRP) minus the material cost (VMC) and the process cost (PRC), adjusted for two yields: the loss incurred in the disassembly process (Y) and the loss incurred in the inspection processes (Yinsp). That can be expressed as:
Figure 41.2 shows the material flow, assuming that the core is remanufactured just once, it has a second life and is finally disposed of at no cost. A fraction a of the cores is rejected during pre-inspection. At the end of the process, all remanufactured products are inspected and a fraction p is rejected. Hence,
A core returning to the remanufacturing facility provides an opportunity value, given by CV, which is exploited when it is effectively remanufactured. This expression should be used with caution, because of the assumptions that directly affect the result. It overlooks the transport cost to collect cores and the revenue from the sale of recyclable materials and from tipping fees. More important, though, the operating yields are sensitive to both exogenous and endogenous causes. Not much can be done about the exogenous yield changes. However, as the remanufacturing technology progresses, the process yield is expected to improve.
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