Abstract: When a remanufacturing enterprise leases the second-hand product and provides relative service to the user, the efforts of quality service for the enterprise and the efforts of elaborate operations for the user will undoubtedly affect the service quantity and costs as well as the quality and lifetime of the returned products, thus the remanufacturing costs and environment benefits. In this paper, the degree of both efforts influencing the performance of the leased product service system is studied based on remanufacturing, introducing a transfer payment from enterprise to user as a moderator, discussing the relationship between equilibrium effort levels and revenue function of the channel based on shared-saving contracts. It's found that when the marginal value of taking-back used product over the remanufacturing enterprise's and user's efforts is respectively greater than the marginal cost over the efforts and the transfer payment of per service savings has limited incentive effect, the system can achieve coordination and the total channel profit is greater than the fixed service price contract. Furthermore, a detailed numerical simulation finds that service demand and channel profit have the same trends with the transfer payments and additional service will not decrease the channel profit. The transfer payment of per service savings is in inverse ratio to the efforts of remanufacturing enterprise, in direct ratio to the efforts of product user. In different level of cost the enterprises have the willingness to give corresponding efforts, but when they have no cost advantages the willingness of remanufacturing enterprise will be higher and so is the environmental value.

Key words: remanufacture, product service system, leased product, shared-saving contracts