A bilevel optimisation model for the joint configuration of new and remanufactured products considering specification upgrading of used products

The joint optimisation of product design configuration (PDC) for new and remanufactured products involves specification upgrading for parts recovered from used product returns. Reversely, the specification upgrading decision for used parts/modules is also affected by the original specifications selected for parts/modules during the new product design process. Hence, the joint optimisation of PDC for both new and remanufactured products entails a hierarchical decision framework, of which scarcely any study involves the specification upgrading concerns. To fill this gap, this paper proposes a bilevel optimisation model that involves two-level decision-making. The upper level handles the configuration of new product variants to maximise the shared surplus of new product offerings. Meanwhile, the lower-level deals with the configuration and specification upgrading of remanufactured product variants to maximise the shared surplus of remanufactured product offerings. A non-linear integer bilevel programming is further presented to model the hierarchical optimisation problem, to solve which a nested bilevel genetic algorithm is also proposed. Furthermore, a case study involving configuration design for new and remanufactured mobile phone variants is conducted to validate the proposed model. Four scenarios are investigated to examine the effects of model parameters on the optimal solutions with the simulation result given at last.