A consignment stock scheme for closed loop supply chain with imperfect manufacturing processes, lost sales, and quality dependent return: Multi Levels Structure

This paper considers a multi-level closed loop supply chain (CLSC) including a supplier, a producer, a retailer, and a collector. Most of the works in the literature considered remanufactured products as-good-as newly produced items, while in the real world situations, some customers perceive remanufactured items as lower quality products than newly produced ones; so we assume that demands for manufactured and remanufactured items are different which leads to lost sales situations. To make the study more realistic, we assume the return rate of the second-hand items as a variable function which depends on the acceptance quality level of the returns. Also, producing and reproducing processes are assumed to be imperfect, so they can produce some defectives which are reworked in the same cycle. To address this problem, a mathematical model with single manufacturing/remanufacturing cycles is established and solved using two algorithms extended for the case of local (non-integrated) and global (integrated) optimization. The results of our analysis indicate that integration results in higher acceptance quality level of returns, higher replenishment cycle time for both manufactured and remanufactured items and less (higher) number of shipments to the retailer per manufacturing (remanufacturing) cycle. Furthermore, the results indicate that as the revenue of selling newly produced items (remanufactured items) increases, acceptance quality level of the returns decreases (increases) and the total number of shipments to the retailer per manufacturing (remanufacturing) cycle increases (decreases).