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Single-item repairable inventory system with stochastic new and warranty demands

Author

Listed:
  • Lin, Yizhong
  • Leung, Janny M.Y.
  • Zhang, Lianmin
  • Gu, Jia-Wen

Abstract

This paper analyses a multi-period single-item repairable inventory system with stochastic new and warranty demands. We assume that newly-procured items are indistinguishable from items repaired from repairable warranty returns and new demand has higher priority than warranty demand within a period. Our model also captures the “repair loss” in repairing returns in each period. We formulate the problem by a dynamic programme, and prove that the optimal policy is completely defined by three period-dependent thresholds: the purchase-up-to level, the repair-up-to level, and the scrap-down-to level. Numerical results demonstrate the effectiveness of the optimal policy and show that our optimal strategy outperforms the repair-all strategy and no-repair strategy. Managerial insights are also generated.

Suggested Citation

  • Lin, Yizhong & Leung, Janny M.Y. & Zhang, Lianmin & Gu, Jia-Wen, 2020. "Single-item repairable inventory system with stochastic new and warranty demands," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 142(C).
    • Handle: RePEc:eee:transe:v:142:y:2020:i:c:s1366554520306864
    DOI: 10.1016/j.tre.2020.102035
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    3. Yang, Feng & Wang, Manman & Ang, Sheng, 2021. "Optimal remanufacturing decisions in supply chains considering consumers’ anticipated regret and power structures," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 148(C).

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