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A unified theory of the dynamics of closed-loop supply chains

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  • Hosoda, Takamichi
  • Disney, Stephen M.

Abstract

We investigate the dynamics of a closed-loop supply chain with first-order auto-regressive (AR(1)) demand and return processes. We assume these two processes are cross-correlated. The remanufacturing process is subject to a random triage yield. Remanufactured products are considered as-good-as-new and used to partially satisfy market demand; newly manufactured products make up the remainder. We derive the optimal linear policy in our closed-loop supply chain setting to minimise the manufacturer’s inventory costs. We show that the lead-time paradox can emerge in many cases. In particular, the auto- and cross-correlation parameters and variances of the error terms in the demand and the returns, as well as the remanufacturing lead time, all influence the existence of the lead-time paradox. Finally, we propose managerial recommendations for manufacturers.

Suggested Citation

  • Hosoda, Takamichi & Disney, Stephen M., 2018. "A unified theory of the dynamics of closed-loop supply chains," European Journal of Operational Research, Elsevier, vol. 269(1), pages 313-326.
    • Handle: RePEc:eee:ejores:v:269:y:2018:i:1:p:313-326
    DOI: 10.1016/j.ejor.2017.07.020
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    References listed on IDEAS

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    2. Robert N. Boute & Stephen M. Disney & Joren Gijsbrechts & Jan A. Van Mieghem, 2022. "Dual Sourcing and Smoothing Under Nonstationary Demand Time Series: Reshoring with SpeedFactories," Management Science, INFORMS, vol. 68(2), pages 1039-1057, February.
    3. Dominguez, Roberto & Cannella, Salvatore & Ponte, Borja & Framinan, Jose M., 2020. "On the dynamics of closed-loop supply chains under remanufacturing lead time variability," Omega, Elsevier, vol. 97(C).
    4. María Arquer & Borja Ponte & Raúl Pino, 2022. "Examining the balance between efficiency and resilience in closed-loop supply chains," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(4), pages 1307-1336, December.
    5. Fu, Lingxian & Tang, Jie & Meng, Fanyong, 2021. "A disease transmission inspired closed-loop supply chain dynamic model for product collection," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    6. Ponte, Borja & Dominguez, Roberto & Cannella, Salvatore & Framinan, Jose M., 2022. "The implications of batching in the bullwhip effect and customer service of closed-loop supply chains," International Journal of Production Economics, Elsevier, vol. 244(C).
    7. Ponte, Borja & Naim, Mohamed M. & Syntetos, Aris A., 2019. "The value of regulating returns for enhancing the dynamic behaviour of hybrid manufacturing-remanufacturing systems," European Journal of Operational Research, Elsevier, vol. 278(2), pages 629-645.
    8. Jackson Jinhong Mi & Zongsheng Huang & Kai Wang & Sang-Bing Tsai & Guodong Li & Jiangtao Wang, 2018. "The Presence of a Powerful Retailer on Dynamic Collecting Closed-Loop Supply Chain From a Sustainable Innovation Perspective," Sustainability, MDPI, vol. 10(7), pages 1-17, June.
    9. Dominguez, Roberto & Cannella, Salvatore & Framinan, Jose M., 2021. "Remanufacturing configuration in complex supply chains," Omega, Elsevier, vol. 101(C).
    10. Ponte, Borja & Cannella, Salvatore & Dominguez, Roberto & Naim, Mohamed M. & Syntetos, Aris A., 2021. "Quality grading of returns and the dynamics of remanufacturing," International Journal of Production Economics, Elsevier, vol. 236(C).
    11. Lin, Junyi & Zhou, Li & Spiegler, Virginia L.M. & Naim, Mohamed M. & Syntetos, Aris, 2022. "Push or Pull? The impact of ordering policy choice on the dynamics of a hybrid closed-loop supply chain," European Journal of Operational Research, Elsevier, vol. 300(1), pages 282-295.
    12. Ponte, Borja & Framinan, Jose M. & Cannella, Salvatore & Dominguez, Roberto, 2020. "Quantifying the Bullwhip Effect in closed-loop supply chains: The interplay of information transparencies, return rates, and lead times," International Journal of Production Economics, Elsevier, vol. 230(C).
    13. Yang, Y. & Lin, J. & Hedenstierna, C.P.T. & Zhou, L., 2023. "The more the better? The impact of the number and location of product recovery options on the system dynamics in a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).
    14. Hosoda, Takamichi & Disney, Stephen M. & Zhou, Li, 2021. "The yield rate paradox in closed-loop supply chains," International Journal of Production Economics, Elsevier, vol. 239(C).

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