Grant: Discovery Grants Program - Individual

The trade-in strategy is widely applied in industries to promote sales of the new product, accelerate purchasing frequency, and enhance the recycling of used products. In the United States, 80% of the household appliances sales, such as electric heaters and refrigerators, are replacement purchases [2]. With a trade-in program, a customer can purchase a new product with a special discount after returning a qualified used product to the seller. However, the trade-in strategy can lead to additional costs, such as inspection, disassembly, and collection costs, and may cause the conflict and competition between supply chain members. Therefore, it is critical for the manufacturer or the retailer to adopt the optimal trade-in strategy, including setting the optimal trade-in rebate, selecting the appropriate returning channels, and deciding the acceptable quality of returned products, to promote sales for both new and replacement customers and achieve the goal of sustainability. Trade-in service has recently attracted much attention in both academia and industrial area. Through my explorations over the past several years, I have identified significant research gaps related to trade-in service, and I propose to elucidate: 1) the impact of the trade-in strategy in the retailer-led supply chain with both online and offline channel; 2) the design of a customized trade-in strategy, which offers different policies to the products with different qualities; 3) the design of an upgraded trade-in strategy, in which customers can update their trade-in service by making extra payment when purchasing the new product to guarantee a fixed trade-in rebate later; 4) the impact of customers' behavior on the design of the trade-in strategy; 5) the impact of the trade-in strategy on the environmental policy designed by the government and sustainability issues. Designing the optimal trade-in service can provide both economic and environmental benefits. From a theoretical perspective, the research program enriches theories by including the supply chain structure, the product's durability, the customers' behavior, and the environmental policy in the trade-in strategy design. For business practices, the outcomes from this research can help the manufacturer and the retailer design the appropriate trade-in strategy to maximize profits, expand market shares, increase the social image, and enhance competitiveness in the global market by setting the optimal selling prices, production quantity, returning rebates, and trade-in service rules. Furthermore, the outcomes of this research program can also help the government to design the optimal environmental policy, such as cap-and-trade and the carbon tax to achieve the goal of sustainability under the manufacturer's production plan with the trade-in strategy. Finally, the proposed research will provide opportunities to train students of diverse backgrounds and cultures at both the undergraduate and graduate levels.