Integrating activity-based costing and revenue management approaches to analyse the remanufacturing outsourcing decision with qualitative factors

This paper integrates the Activity-Based Costing (ABC) approach, Revenue Management (RM) approach and the theory of non-competitive behaviour to discover the sufficient and necessary conditions of the remanufacturing outsourcing decision. The solution shows that the more the firm is uncertain about the costs and the inputs of materials, unit- and batch- level activities, the more it might benefit from the information of costs transferred by the outsourcing partner. The qualitative factors show how the information obtained from ABC can bring more comprehensive solutions for management decisions in detailed cost and input levels, which contribute to the qualitative interpretations in quantitative analysis. Further, the result also demonstrates that RM still benefits profits under outsourcing based on sorting mechanism and setting a separate price for each market segment.