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Inventory control policies for inspection and remanufacturing of returns: A case study

Listed author(s):
  • Nenes, George
  • Panagiotidou, Sofia
  • Dekker, Rommert

When both purchase of new products and remanufacturing of returned products constitute options for a company, it faces a trade-off between the long purchase lead times and the high purchase costs versus the uncertainties generated by the unknown a priori quantity and quality of returns. In other words, although the remanufacturing of returns is generally a faster and less expensive alternative for a company, compared to the procurement of new products, both quality and quantity of returns are unfortunately highly stochastic. In such cases, companies have to select the ordering and remanufacturing policy so as to maximize their performance according to specific criteria, e.g., minimize the expected cost or maximize the expected profit. In this paper we investigate alternative policies for a system where both demand of new products and returns of used products are stochastic. The expected cost of each policy for a real application problem is computed and the best policy is proposed. A numerical investigation is also conducted in order to identify the best policy under various alternative scenarios.

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Article provided by Elsevier in its journal International Journal of Production Economics.

Volume (Year): 125 (2010)
Issue (Month): 2 (June)
Pages: 300-312

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Handle: RePEc:eee:proeco:v:125:y:2010:i:2:p:300-312
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  1. Ketzenberg, M.E. & van der Laan, E.A. & Teunter, R.H., 2004. "The Value of Information in Reverse Logistics," ERIM Report Series Research in Management ERS-2004-053-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  2. Tagaras, George & Zikopoulos, Christos, 2008. "Optimal location and value of timely sorting of used items in a remanufacturing supply chain with multiple collection sites," International Journal of Production Economics, Elsevier, vol. 115(2), pages 424-432, October.
  3. 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.
  4. Guide, V. Daniel R. & Kraus, Mark E. & Srivastava, Rajesh, 1997. "Scheduling policies for remanufacturing," International Journal of Production Economics, Elsevier, vol. 48(2), pages 187-204, January.
  5. Ferrer, Geraldo, 2003. "Yield information and supplier responsiveness in remanufacturing operations," European Journal of Operational Research, Elsevier, vol. 149(3), pages 540-556, September.
  6. Ayres, Robert & Ferrer, Geraldo & Van Leynseele, Tania, 1997. "Eco-efficiency, asset recovery and remanufacturing," European Management Journal, Elsevier, vol. 15(5), pages 557-574, October.
  7. 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.
  8. Kiesmuller, G. P., 2003. "Optimal control of a one product recovery system with leadtimes," International Journal of Production Economics, Elsevier, vol. 81(1), pages 333-340, January.
  9. 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.
  10. van der Laan, Erwin & Dekker, Rommert & Salomon, Marc, 1996. "Product remanufacturing and disposal: A numerical comparison of alternative control strategies," International Journal of Production Economics, Elsevier, vol. 45(1-3), pages 489-498, August.
  11. Mahadevan, B. & Pyke, David F. & Fleischmann, Moritz, 2003. "Periodic review, push inventory policies for remanufacturing," European Journal of Operational Research, Elsevier, vol. 151(3), pages 536-551, December.
  12. Teunter, Ruud H. & Vlachos, Dimitrios, 2002. "On the necessity of a disposal option for returned items that can be remanufactured," International Journal of Production Economics, Elsevier, vol. 75(3), pages 257-266, February.
  13. van der Laan, Erwin & Salomon, Marc & Dekker, Rommert, 1999. "An investigation of lead-time effects in manufacturing/remanufacturing systems under simple PUSH and PULL control strategies," European Journal of Operational Research, Elsevier, vol. 115(1), pages 195-214, May.
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