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The value of information in a capacitated closed loop supply chain

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  • Ketzenberg, Michael

Abstract

We explore the value of information in the context of a firm that faces uncertainty with respect to demand, product returns, recovery yield, and capacity utilization. Capacity is finite and shared between new production and recovery operations. The operational decisions of interest are the quantity of new product to produce, the quantity of returns to recover, and the quantity of returns to dispose. Product recovery is uncertain in that each returned unit can be successfully recovered with a known probability, and otherwise it is discarded at a cost. Demand in a period is satisfied with new production, recovered returns, or a mix of both types. We measure and evaluate the value of information through three information cases that separately address different types of information: demand, recovery yield, and capacity utilization. We find that there is no dominance in value amongst the different types of information, although information on capacity utilization provides the highest average value and exceeds the value of the other two types of information in 55% of the cases studied. We also identify the operating conditions in which each type of information is most valuable, compare the value of information to other types of investments, and also assess robustness with respect to the accuracy of information.

Suggested Citation

  • Ketzenberg, Michael, 2009. "The value of information in a capacitated closed loop supply chain," European Journal of Operational Research, Elsevier, vol. 198(2), pages 491-503, October.
  • Handle: RePEc:eee:ejores:v:198:y:2009:i:2:p:491-503
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    References listed on IDEAS

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    Cited by:

    1. Nowak, Thomas & Hofer, Vera, 2014. "On stabilizing volatile product returns," European Journal of Operational Research, Elsevier, vol. 234(3), pages 701-708.
    2. He, Yuanjie, 2015. "Acquisition pricing and remanufacturing decisions in a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 163(C), pages 48-60.
    3. Manoj Kumar Paras & Daniel Ekwall & Rudrajeet Pal & Antonela Curteza & Yan Chen & Lichuan Wang, 2018. "An Exploratory Study of Swedish Charities to Develop a Model for the Reuse-Based Clothing Value Chain," Sustainability, MDPI, Open Access Journal, vol. 10(4), pages 1-19, April.
    4. Choi, Tsan-Ming & Sethi, Suresh, 2010. "Innovative quick response programs: A review," International Journal of Production Economics, Elsevier, vol. 127(1), pages 1-12, September.
    5. Gayon, Jean-Philippe & Vercraene, Samuel & Flapper, Simme Douwe P., 2017. "Optimal control of a production-inventory system with product returns and two disposal options," European Journal of Operational Research, Elsevier, vol. 262(2), pages 499-508.
    6. Govindan, Kannan & Soleimani, Hamed & Kannan, Devika, 2015. "Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future," European Journal of Operational Research, Elsevier, vol. 240(3), pages 603-626.
    7. Ondemir, Onder & Gupta, Surendra M., 2014. "A multi-criteria decision making model for advanced repair-to-order and disassembly-to-order system," European Journal of Operational Research, Elsevier, vol. 233(2), pages 408-419.
    8. Junhai Ma & Hao Ren & Miao Yu & Meihong Zhu, 2018. "Research on the Complexity and Chaos Control about a Closed-Loop Supply Chain with Dual-Channel Recycling and Uncertain Consumer Perception," Complexity, Hindawi, vol. 2018, pages 1-13, January.
    9. De Giovanni, Pietro & Zaccour, Georges, 2014. "A two-period game of a closed-loop supply chain," European Journal of Operational Research, Elsevier, vol. 232(1), pages 22-40.
    10. Tianji Yang & Chao Fu & Xinbao Liu & Jun Pei & Lin Liu & Panos M. Pardalos, 2018. "Closed-loop supply chain inventory management with recovery information of reusable containers," Journal of Combinatorial Optimization, Springer, vol. 35(1), pages 266-292, January.
    11. Chen, Jing, 2011. "The impact of sharing customer returns information in a supply chain with and without a buyback policy," European Journal of Operational Research, Elsevier, vol. 213(3), pages 478-488, September.
    12. 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.
    13. Hosoda, Takamichi & Disney, Stephen M. & Gavirneni, Srinagesh, 2015. "The impact of information sharing, random yield, correlation, and lead times in closed loop supply chains," European Journal of Operational Research, Elsevier, vol. 246(3), pages 827-836.

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