Facing a huge number and variety of discarded products, how to conduct strategic management of product recovery and gain better economic and environmental performances are people's concerns. In this paper, a stylised model of a monopoly manufacturer who implements product recovery management under the voluntary mechanism is considered. The manufacturer can recycle, remanufacture and properly dispose of used cores after collecting. The condition under which the manufacturer gives up product recovery management is discussed and four different product recovery strategies portfolios are characterised according to profitable trade-offs between available product recovery options. Under each product recovery strategies portfolio, the product recovery strategies are determined corresponding to different cost intervals of new product and optimal solutions under per product recovery strategy are displayed. Then, how different revenue and cost parameters influence the optimal production and recovery decisions and economic profits is analysed. To evaluate the environmental impact of per product recovery strategies portfolio, product life-cycle assessment approach is adopted to analyse changes in environmental impacts after incorporating product recovery management. Implementing product recovery management does not always make the environment better and the condition under which implementing product recovery management brings a better environmental impact is determined.

Remanufactured products offer better environmental benefits, and governments encourage manufacturers to remanufacture through various subsidy policies. This practice has shown that, in addition to product sales, remanufactured product can also achieve its value through social donation. Based on the remanufactured product value realization approaches, governments provide two kinds of incentive policies, which are remanufactured product sales subsidies and remanufactured product donation subsidies. This paper constructs a two-stage Stackelberg game model including a government and a manufacturer under two different policies, which can be solved by backward induction. By comparing the optimal decision of the two policies, our results show that, compared with the remanufacturing sales subsidy, donation subsidy weakens the cannibalization of remanufactured products for new products and increases the quantity of new products. It reduces the sales quantity of remanufactured products, but increases their total quantity. Under certain conditions of low subsidy, the manufacturer adopting sales subsidy provides better economic and environmental benefits. Under certain conditions of high subsidy, the manufacturer adopting donation subsidy offers better economic and environmental benefits. When untreated product environmental impact is large enough, donation subsidy policy has a better social welfare. Otherwise, the choice of social welfare of these two different policies depends on the social impact of remanufactured product donated.

Although remanufacturing has great economic and environmental potential, internal cannibalization, and lack of consumer acceptance of remanufactured products prevent original equipment manufacturer (OEM) from realizing the full potential value through remanufacturing. Practices show that remanufactured products can realize their value by the donation, besides resale. Thus, this paper incorporates the donation of remanufactured products with government subsidy and presents an upgraded remanufacturing strategy to expand the demand for remanufactured products and weaken the internal cannibalization of remanufactured products. We respectively construct the two-period game model with and without upgraded remanufacturing and explore the effect of upgraded remanufacturing on production decision, economic and environmental benefits. The main conclusions are as follows. The donation subsidy is negatively related with the sale quantity of remanufactured products, but is positively related with the donation quantity of remanufactured products and the quantity of new products. The donation subsidy expands the demand for remanufactured products and weakens internal cannibalization of remanufactured products. Whether the upgraded remanufacturing strategy is profitable depends on the fixed cost of the remanufacturing. When consumers consider remanufactured products environmentally friendly, the government can realize an OEM’s win-win situation where the economic and environmental benefits get improved by adjusting the donation subsidy. Otherwise, introducing upgraded remanufacturing makes the environment worse. Comparatively speaking, a low-cost and environmentally friendly manufacturer is relatively easier to achieve the win-win situation through donation subsidy.