According to conventional thinking, interchangeable process system engineering concepts like modular or commonality designs may boost sales while lowering production costs. Both new manufacture and reconditioning will be able to be assembled effectively with the interchangeable design. Therefore, while designing interchangeable products for refurbishing operations, it is crucial to strike a balance between income from cost drivers and cannibalization impacts from refurbishment. Hence, this study examines how OEMs’ convertible design influences possibilities for repairing as well as the environment. We create two different theoretical frameworks. First, an OEM decides to do the refurbishing procedures internally (Model O). Second, an OEM decides to use third-party refurbishers as an outsourcing option with the assistance of government subsidies (Model G). Both types are built on interchangeable design principles. This article adds to two different things. There is a variety of research that emphasizes interchangeable designs for different product lines, but their conclusions about interchangeable designs that take cannibalization issues between high-end and low-end products into account might not always apply to interchangeable designs used in the context of refurbishing. This article explores how the OEM’s strategic choice of a replaceable design impacts the refurbishment’s environmental sustainability, regardless of whether it is carried out internally or externally. There are two types of consumers: high-end customers who are willing to buy new or refurbished products and low-end customers who are only willing to buy refurbished products.

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