IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v288y2020i1d10.1007_s10479-020-03545-4.html
   My bibliography  Save this article

Policies for inventory models with product returns forecast from past demands and past sales

Author

Listed:
  • Mabel C. Chou

    (National University of Singapore)

  • Chee-Khian Sim

    (University of Portsmouth)

  • Xue-Ming Yuan

    (Singapore Institute of Manufacturing Technology, Agency for Science, Technology and Research (A*STAR))

Abstract

Finite horizon periodic review backlog models are considered in this paper for an inventory system that remanufactures two types of cores: buyback cores and normal cores. Returns of used products as buyback cores are modelled to depend on past demands and past sales. We derive an optimal inventory policy for the model in which returns are forecast to depend on past demands, and analyze properties of the optimal cost and optimal policy we derived. As the structure of the optimal inventory policy for the model in which returns are forecast from past sales is unlikely to be tractable, we instead consider a feasible inventory policy with a nice structure for this model. We investigate how close this policy is to optimality and find that in the worst case, the difference in system costs between the feasible policy and the optimal inventory policy is bounded by a constant that is dependent only on cost parameters, mean demands and a discount factor, and is independent of the planning horizon and initial inventories. We also perform numerical experiments to study the difference between system costs under the feasible policy and those under the optimal policy.

Suggested Citation

  • Mabel C. Chou & Chee-Khian Sim & Xue-Ming Yuan, 2020. "Policies for inventory models with product returns forecast from past demands and past sales," Annals of Operations Research, Springer, vol. 288(1), pages 137-180, May.
    • Handle: RePEc:spr:annopr:v:288:y:2020:i:1:d:10.1007_s10479-020-03545-4
    DOI: 10.1007/s10479-020-03545-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-020-03545-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-020-03545-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gregory A. DeCroix, 2006. "Optimal Policy for a Multiechelon Inventory System with Remanufacturing," Operations Research, INFORMS, vol. 54(3), pages 532-543, June.
    2. Sean X. Zhou & Zhijie Tao & Xiuli Chao, 2011. "Optimal Control of Inventory Systems with Multiple Types of Remanufacturable Products," Manufacturing & Service Operations Management, INFORMS, vol. 13(1), pages 20-34, March.
    3. Kiesmuller, Gudrun P. & van der Laan, Erwin A., 2001. "An inventory model with dependent product demands and returns," International Journal of Production Economics, Elsevier, vol. 72(1), pages 73-87, June.
    4. van der Laan, Erwin A. & Teunter, Ruud H., 2006. "Simple heuristics for push and pull remanufacturing policies," European Journal of Operational Research, Elsevier, vol. 175(2), pages 1084-1102, December.
    5. M. Pourakbar & E. Laan & R. Dekker, 2014. "End-of-Life Inventory Problem with Phaseout Returns," Production and Operations Management, Production and Operations Management Society, vol. 23(9), pages 1561-1576, September.
    6. van der Laan, Erwin & Salomon, Marc, 1997. "Production planning and inventory control with remanufacturing and disposal," European Journal of Operational Research, Elsevier, vol. 102(2), pages 264-278, October.
    7. Edward Ignall & Arthur F. Veinott, Jr., 1969. "Optimality of Myopic Inventory Policies for Several Substitute Products," Management Science, INFORMS, vol. 15(5), pages 284-304, January.
    8. Guo, Shanshan & Aydin, Goker & Souza, Gilvan C., 2014. "Dismantle or remanufacture?," European Journal of Operational Research, Elsevier, vol. 233(3), pages 580-583.
    9. L. Beril Toktay & Lawrence M. Wein & Stefanos A. Zenios, 2000. "Inventory Management of Remanufacturable Products," Management Science, INFORMS, vol. 46(11), pages 1412-1426, November.
    10. Gregory A. DeCroix & Paul H. Zipkin, 2005. "Inventory Management for an Assembly System with Product or Component Returns," Management Science, INFORMS, vol. 51(8), pages 1250-1265, August.
    11. Hsueh, Che-Fu, 2011. "An inventory control model with consideration of remanufacturing and product life cycle," International Journal of Production Economics, Elsevier, vol. 133(2), pages 645-652, October.
    12. Murat Bayiz & Christopher S. Tang, 2004. "An Integrated Planning System for Managing the Refurbishment of Thermoluminescent Badges," Interfaces, INFORMS, vol. 34(5), pages 383-393, October.
    13. Zhijie Tao & Sean X. Zhou, 2014. "Approximation Balancing Policies for Inventory Systems with Remanufacturing," Mathematics of Operations Research, INFORMS, vol. 39(4), pages 1179-1197, November.
    14. John Khawam & Warren H. Hausman & Dinah W. Cheng, 2007. "Warranty Inventory Optimization for Hitachi Global Storage Technologies, Inc," Interfaces, INFORMS, vol. 37(5), pages 455-471, October.
    15. Sean X. Zhou & Yikun Yu, 2011. "TECHNICAL NOTE---Optimal Product Acquisition, Pricing, and Inventory Management for Systems with Remanufacturing," Operations Research, INFORMS, vol. 59(2), pages 514-521, April.
    16. de Brito, M.P. & Flapper, S.D.P. & Dekker, R., 2002. "Reverse logistics," Econometric Institute Research Papers EI 2002-21, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    17. Zhi-Sheng Ye & D.N. Murthy & Min Xie & Loon-Ching Tang, 2013. "Optimal burn-in for repairable products sold with a two-dimensional warranty," IISE Transactions, Taylor & Francis Journals, vol. 45(2), pages 164-176.
    18. Jim (Junmin) Shi & Michael N. Katehakis & Benjamin Melamed & Yusen Xia, 2014. "Production-Inventory Systems with Lost Sales and Compound Poisson Demands," Operations Research, INFORMS, vol. 62(5), pages 1048-1063, October.
    19. Justin Jia & Susan H. Xu & V. Daniel R. Guide Jr., 2016. "Addressing Supply–Demand Imbalance: Designing Efficient Remanufacturing Strategies," Production and Operations Management, Production and Operations Management Society, vol. 25(11), pages 1958-1967, November.
    20. Kartikeya Puranam & Michael Katehakis, 2014. "On optimal bidding and inventory control in sequential procurement auctions: the multi period case," Annals of Operations Research, Springer, vol. 217(1), pages 447-462, June.
    21. de Brito, Marisa P. & van der Laan, Erwin A., 2009. "Inventory control with product returns: The impact of imperfect information," European Journal of Operational Research, Elsevier, vol. 194(1), pages 85-101, April.
    22. Xiting Gong & Xiuli Chao, 2013. "Technical Note---Optimal Control Policy for Capacitated Inventory Systems with Remanufacturing," Operations Research, INFORMS, vol. 61(3), pages 603-611, June.
    23. Vincent P. Simpson, 1978. "Optimum Solution Structure for a Repairable Inventory Problem," Operations Research, INFORMS, vol. 26(2), pages 270-281, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lin, Jiaxin & Choi, Tsan-Ming & Kuo, Yong-Hong, 2023. "Will providing return-freight-insurances do more good than harm to dual-channel e-commerce retailers?," European Journal of Operational Research, Elsevier, vol. 307(3), pages 1225-1239.
    2. 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).
    3. Duong, Quang Huy & Zhou, Li & Meng, Meng & Nguyen, Truong Van & Ieromonachou, Petros & Nguyen, Duy Tiep, 2022. "Understanding product returns: A systematic literature review using machine learning and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 243(C).
    4. Guangyong Yang & Guojun Ji & Kim Hua Tan, 2022. "Impact of artificial intelligence adoption on online returns policies," Annals of Operations Research, Springer, vol. 308(1), pages 703-726, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andre P. Calmon & Stephen C. Graves, 2017. "Inventory Management in a Consumer Electronics Closed-Loop Supply Chain," Manufacturing & Service Operations Management, INFORMS, vol. 19(4), pages 568-585, October.
    2. Zhijie Tao & Sean X. Zhou, 2014. "Approximation Balancing Policies for Inventory Systems with Remanufacturing," Mathematics of Operations Research, INFORMS, vol. 39(4), pages 1179-1197, November.
    3. Xiting Gong & Xiuli Chao, 2013. "Technical Note---Optimal Control Policy for Capacitated Inventory Systems with Remanufacturing," Operations Research, INFORMS, vol. 61(3), pages 603-611, June.
    4. Vercraene, Samuel & Gayon, Jean-Philippe, 2013. "Optimal control of a production-inventory system with productreturns," International Journal of Production Economics, Elsevier, vol. 142(2), pages 302-310.
    5. Cai, Xiaoqiang & Lai, Minghui & Li, Xiang & Li, Yongjian & Wu, Xianyi, 2014. "Optimal acquisition and production policy in a hybrid manufacturing/remanufacturing system with core acquisition at different quality levels," European Journal of Operational Research, Elsevier, vol. 233(2), pages 374-382.
    6. Tang, Christopher S. & Zhou, Sean, 2012. "Research advances in environmentally and socially sustainable operations," European Journal of Operational Research, Elsevier, vol. 223(3), pages 585-594.
    7. 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).
    8. Vercraene, Samuel & Gayon, Jean-Philippe & Flapper, Simme Douwe, 2014. "Coordination of manufacturing, remanufacturing and returns acceptance in hybrid manufacturing/remanufacturing systems," International Journal of Production Economics, Elsevier, vol. 148(C), pages 62-70.
    9. Gregory A. DeCroix, 2006. "Optimal Policy for a Multiechelon Inventory System with Remanufacturing," Operations Research, INFORMS, vol. 54(3), pages 532-543, June.
    10. Ahiska, S. Sebnem & King, Russell E., 2010. "Life cycle inventory policy characterizations for a single-product recoverable system," International Journal of Production Economics, Elsevier, vol. 124(1), pages 51-61, March.
    11. Zhou, Li & Xie, Jiaping & Gu, Xiaoyu & Lin, Yong & Ieromonachou, Petros & Zhang, Xiaole, 2016. "Forecasting return of used products for remanufacturing using Graphical Evaluation and Review Technique (GERT)," International Journal of Production Economics, Elsevier, vol. 181(PB), pages 315-324.
    12. Sean X. Zhou & Yikun Yu, 2011. "TECHNICAL NOTE---Optimal Product Acquisition, Pricing, and Inventory Management for Systems with Remanufacturing," Operations Research, INFORMS, vol. 59(2), pages 514-521, April.
    13. Sebnem Ahiska, S. & King, Russell E., 2010. "Inventory optimization in a one product recoverable manufacturing system," International Journal of Production Economics, Elsevier, vol. 124(1), pages 11-19, March.
    14. Sean X. Zhou & Zhijie Tao & Xiuli Chao, 2011. "Optimal Control of Inventory Systems with Multiple Types of Remanufacturable Products," Manufacturing & Service Operations Management, INFORMS, vol. 13(1), pages 20-34, March.
    15. Z P Bayındır & N Erkip & R Güllü, 2005. "Assessing the benefits of remanufacturing option under one-way substitution," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(3), pages 286-296, March.
    16. Kim, Eungab & Saghafian, Soroush & Van Oyen, Mark P., 2013. "Joint control of production, remanufacturing, and disposal activities in a hybrid manufacturing–remanufacturing system," European Journal of Operational Research, Elsevier, vol. 231(2), pages 337-348.
    17. de Brito, Marisa P. & Dekker, Rommert, 2003. "Modelling product returns in inventory control--exploring the validity of general assumptions," International Journal of Production Economics, Elsevier, vol. 81(1), pages 225-241, January.
    18. Gregory A. DeCroix & Jing-Sheng Song & Paul H. Zipkin, 2009. "Managing an Assemble-to-Order System with Returns," Manufacturing & Service Operations Management, INFORMS, vol. 11(1), pages 144-159, October.
    19. Nenes, George & Panagiotidou, Sofia & Dekker, Rommert, 2010. "Inventory control policies for inspection and remanufacturing of returns: A case study," International Journal of Production Economics, Elsevier, vol. 125(2), pages 300-312, June.
    20. Duong, Quang Huy & Zhou, Li & Meng, Meng & Nguyen, Truong Van & Ieromonachou, Petros & Nguyen, Duy Tiep, 2022. "Understanding product returns: A systematic literature review using machine learning and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 243(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:288:y:2020:i:1:d:10.1007_s10479-020-03545-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.