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Managing a closed-loop supply system with random returns and a cyclic delivery schedule

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  • Huynh, Candice H.
  • So, Kut C.
  • Gurnani, Haresh

Abstract

Motivated by an industry example, we develop a mathematical framework to address the inventory replenishment and capacity planning problem for a closed-loop supply system with random returns. The provider needs to deliver new or refurbished products to a group of clients under a fixed cyclic schedule, and also collects back a random portion of the used products in the subsequent delivery cycle for refurbishment. We first address the product replenishment strategy, in which only a random portion of the delivered products will be returned for refurbishment and the supplier must regularly purchase new products to replace the lost units. We then analyze the capacity decision problem where the provider uses his facility to refurbish the returned products for reuse, and the provider could incur extra refurbishing cost to handle the returned product at the end of each cycle due to insufficient capacity. Our models provide a simple decision support tool for making effective replenishment and capacity decisions in managing such a closed-loop supply system.

Suggested Citation

  • Huynh, Candice H. & So, Kut C. & Gurnani, Haresh, 2016. "Managing a closed-loop supply system with random returns and a cyclic delivery schedule," European Journal of Operational Research, Elsevier, vol. 255(3), pages 787-796.
    • Handle: RePEc:eee:ejores:v:255:y:2016:i:3:p:787-796
    DOI: 10.1016/j.ejor.2016.05.035
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    References listed on IDEAS

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    1. Hongtao Zhang & Stephen C. Graves, 1997. "Cyclic Scheduling in a Stochastic Environment," Operations Research, INFORMS, vol. 45(6), pages 894-903, December.
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    5. Erwin van der Laan & Marc Salomon & Rommert Dekker & Luk Van Wassenhove, 1999. "Inventory Control in Hybrid Systems with Remanufacturing," Management Science, INFORMS, vol. 45(5), pages 733-747, May.
    6. Kenné, Jean-Pierre & Dejax, Pierre & Gharbi, Ali, 2012. "Production planning of a hybrid manufacturing–remanufacturing system under uncertainty within a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 135(1), pages 81-93.
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    Cited by:

    1. Tsiliyannis, Christos Aristeides, 2018. "Markov chain modeling and forecasting of product returns in remanufacturing based on stock mean-age," European Journal of Operational Research, Elsevier, vol. 271(2), pages 474-489.
    2. Zhang, Abraham & Wang, Jason X. & Farooque, Muhammad & Wang, Yulan & Choi, Tsan-Ming, 2021. "Multi-dimensional circular supply chain management: A comparative review of the state-of-the-art practices and research," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    3. Jin, Minyue & Zhang, Xueqing & Xiong, Yu & Zhou, Yu, 2021. "Implications of green optimism upon sustainable supply chain management," European Journal of Operational Research, Elsevier, vol. 295(1), pages 131-139.

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