Abstract: There are many uncertainty factors in core acquisition and remanufacturing such as the quality and remanufacturing cost of cores, yield of the remanufacturing process, market demand for the remanufactured products and so on.As a result, the decision-making in production and core acquisition in a remanufacturing system becomes very challenging. A two-stage dynamic model is employed to study the optimal acquisition and production decisions of a remanufacturing system with multiple types of cores under demand uncertainty. This model is then extended to cases with a price-sensitive demand and/or random remanufacturing yield. With the objective of maximizing the expected profit of the remanufacturer, an efficient production frontier with respect to the unit acquisition and remanufacturing cost of each type of cores is first characterized. Based on the backward induction method, the optimal decisions of core acquisition and production are then derived for each case.Numerical experiments are conducted to investigate the impacts of government subsidy, demand uncertainty, price sensitivity of demandand remanufacturing yield variation on the remanufacturer's optimal acquisition, production and pricing decisions. Our theoretical and numerical results show that:(1) there exists a convex and downward sloping efficient production frontier in the remanufacturing system so that any type of cores that is not lying on the frontier will never be used; (2) for the same amount of subsidies, core acquisition subsidy is more efficient than remanufacturing subsidy; (3) for the price-sensitive demand, the optimal price is larger than the sum of the unit acquisition and remanufacturing cost of the first used type of cores; (4) there exists a substitution or complementary effect between any two types of cores, depending on the differences in their unit acquisition and remanufacturing cost; and(5) there exists an hedging effect between demand uncertainty and remanufacturing yield variation, which is decreasing in the degree of demand uncertainty. Our research provides useful managerial insights for remanufacturing firms to make core acquisition and production decisions under uncertain environments.

Key words: multiple types of cores, product acquisition, remanufacturing, pricing, random yield