IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v170y2023ics1366554523000108.html
   My bibliography  Save this article

Optimal procurement strategy for multi-echelon remanufacturing systems under quality uncertainty

Author

Listed:
  • Liao, Haolan
  • Zhang, Qingyu
  • Li, Lu

Abstract

Uncertainties in the quality and price of returned items add to the management complexity of remanufacturing system. To achieve the optimal procurement strategy for improved economic performance, this paper develops a mathematical model to quantify the impact of quality-based categorization of returned products under different return scenarios. Through the stochastic analysis of quality uncertainty with returns, it derives the optimal procurement strategy for cost minimization. The results show that an optimal procurement decision leads to over 80% cost savings in multi-echelon remanufacturing systems. Further, to bridge the gap between optimality theory and practical applications, this paper employs maximum likelihood estimation to speculate the key parameters of quality distribution in an empirical case whereby the optimal procurement strategies are formulated. Thus, the study provides a mathematical foundation for remanufacturers to make optimal decisions for the minimization of total cost. Importantly, the paper innovatively employs a quality coefficient to signal the overall condition in a batch of returned cores before accepting or dismantling, and then establishes the explicit relationship among the quality coefficient and production indexes in remanufacturing.

Suggested Citation

  • Liao, Haolan & Zhang, Qingyu & Li, Lu, 2023. "Optimal procurement strategy for multi-echelon remanufacturing systems under quality uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    • Handle: RePEc:eee:transe:v:170:y:2023:i:c:s1366554523000108
    DOI: 10.1016/j.tre.2023.103023
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554523000108
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2023.103023?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. Roland Geyer & Luk N. Van Wassenhove & Atalay Atasu, 2007. "The Economics of Remanufacturing Under Limited Component Durability and Finite Product Life Cycles," Management Science, INFORMS, vol. 53(1), pages 88-100, January.
    2. Shuihua Han & Weina Ma & Ling Zhao & Xuelian Zhang & Ming K. Lim & Shuangyuan Yang & Stephen Leung, 2016. "A robust optimisation model for hybrid remanufacturing and manufacturing systems under uncertain return quality and market demand," International Journal of Production Research, Taylor & Francis Journals, vol. 54(17), pages 5056-5072, September.
    3. Chen, Jen-Ming & Chang, Chia-I, 2012. "The co-opetitive strategy of a closed-loop supply chain with remanufacturing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 387-400.
    4. Jena, Sarat Kumar & Sarmah, S.P., 2016. "Price and service co-opetiton under uncertain demand and condition of used items in a remanufacturing system," International Journal of Production Economics, Elsevier, vol. 173(C), pages 1-21.
    5. Kumar, Sameer & Putnam, Valora, 2008. "Cradle to cradle: Reverse logistics strategies and opportunities across three industry sectors," International Journal of Production Economics, Elsevier, vol. 115(2), pages 305-315, October.
    6. He, Qidong & Wang, Nengmin & Yang, Zhen & He, Zhengwen & Jiang, Bin, 2019. "Competitive collection under channel inconvenience in closed-loop supply chain," European Journal of Operational Research, Elsevier, vol. 275(1), pages 155-166.
    7. Genc, Talat S. & Giovanni, Pietro De, 2017. "Trade-in and save: A two-period closed-loop supply chain game with price and technology dependent returns," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 514-527.
    8. Moritz Fleischmann & Jo A. E. E. van Nunen & Ben Gräve, 2003. "Integrating Closed-Loop Supply Chains and Spare-Parts Management at IBM," Interfaces, INFORMS, vol. 33(6), pages 44-56, December.
    9. 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.
    10. Kim, T. & Glock, C. H., 2014. "On the use of RFID in the management of reusable containers in closed-loop supply chains under stochastic container return quantities," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 63689, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    11. Kristianto, Yohanes & Helo, Petri, 2014. "Product architecture modularity implications for operations economy of green supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 128-145.
    12. Sheu, Jiuh-Biing & Chou, Yi-Hwa & Hu, Chun-Chia, 2005. "An integrated logistics operational model for green-supply chain management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 41(4), pages 287-313, July.
    13. Fleischmann, Moritz & Bloemhof-Ruwaard, Jacqueline M. & Dekker, Rommert & van der Laan, Erwin & van Nunen, Jo A. E. E. & Van Wassenhove, Luk N., 1997. "Quantitative models for reverse logistics: A review," European Journal of Operational Research, Elsevier, vol. 103(1), pages 1-17, November.
    14. Miao, Zhaowei & Fu, Ke & Xia, Zhiqiang & Wang, Yu, 2017. "Models for closed-loop supply chain with trade-ins," Omega, Elsevier, vol. 66(PB), pages 308-326.
    15. Ye, Yu-Sen & Ma, Zu-Jun & Dai, Ying, 2016. "The price of anarchy in competitive reverse supply chains with quality-dependent price-only contracts," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 89(C), pages 86-107.
    16. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    17. 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.
    18. Franke, C. & Basdere, B. & Ciupek, M. & Seliger, S., 2006. "Remanufacturing of mobile phones--capacity, program and facility adaptation planning," Omega, Elsevier, vol. 34(6), pages 562-570, December.
    19. Zhou, Wei & Piramuthu, Selwyn, 2013. "Remanufacturing with RFID item-level information: Optimization, waste reduction and quality improvement," International Journal of Production Economics, Elsevier, vol. 145(2), pages 647-657.
    20. Akshay Mutha & Saurabh Bansal & V. Daniel R. Guide, 2016. "Managing Demand Uncertainty through Core Acquisition in Remanufacturing," Production and Operations Management, Production and Operations Management Society, vol. 25(8), pages 1449-1464, August.
    21. Halit Üster & Sung Ook Hwang, 2017. "Closed-Loop Supply Chain Network Design Under Demand and Return Uncertainty," Transportation Science, INFORMS, vol. 51(4), pages 1063-1085, November.
    22. Zolfagharinia, Hossein & Hafezi, Maryam & Farahani, Reza Zanjirani & Fahimnia, Behnam, 2014. "A hybrid two-stock inventory control model for a reverse supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 67(C), pages 141-161.
    23. El Saadany, Ahmed M.A. & Jaber, Mohamad Y., 2011. "A production/remanufacture model with returns' subassemblies managed differently," International Journal of Production Economics, Elsevier, vol. 133(1), pages 119-126, September.
    24. Vishal V. Agrawal & Atalay Atasu & Koert van Ittersum, 2015. "Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products," Management Science, INFORMS, vol. 61(1), pages 60-72, January.
    25. Gökçe Esenduran & Yen-Ting Lin & Wenli Xiao & Minyue Jin, 2020. "Choice of Electronic Waste Recycling Standard Under Recovery Channel Competition," Manufacturing & Service Operations Management, INFORMS, vol. 22(3), pages 495-512, May.
    26. Zikopoulos, Christos & Tagaras, George, 2007. "Impact of uncertainty in the quality of returns on the profitability of a single-period refurbishing operation," European Journal of Operational Research, Elsevier, vol. 182(1), pages 205-225, October.
    27. James D. Abbey & Margaret G. Meloy & V. Daniel R. Guide Jr. & Selin Atalay, 2015. "Remanufactured Products in Closed-Loop Supply Chains for Consumer Goods," Production and Operations Management, Production and Operations Management Society, vol. 24(3), pages 488-503, March.
    28. Hong, I-Hsuan & Yeh, Jun-Sheng, 2012. "Modeling closed-loop supply chains in the electronics industry: A retailer collection application," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 817-829.
    29. Cheng-Hu Yang & Jian Wang & Ping Ji, 2015. "Optimal acquisition policy in remanufacturing under general core quality distributions," International Journal of Production Research, Taylor & Francis Journals, vol. 53(5), pages 1425-1438, March.
    30. Teunter, Ruud H. & Flapper, Simme Douwe P., 2011. "Optimal core acquisition and remanufacturing policies under uncertain core quality fractions," European Journal of Operational Research, Elsevier, vol. 210(2), pages 241-248, April.
    31. Liao, Haolan & Zhang, Qingyu & Shen, Neng & Nie, Yongyou & Li, Lu, 2021. "Coordination between forward and reverse production streams for maximum profitability," Omega, Elsevier, vol. 104(C).
    32. Caggiani, Leonardo & Ottomanelli, Michele & Dell’Orco, Mauro, 2014. "Handling uncertainty in Multi Regional Input-Output models by entropy maximization and fuzzy programming," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 71(C), pages 159-172.
    33. V. Daniel R. Guide, Jr. & Ruud H. Teunter & Luk N. Van Wassenhove, 2003. "Matching Demand and Supply to Maximize Profits from Remanufacturing," Manufacturing & Service Operations Management, INFORMS, vol. 5(4), pages 303-316, October.
    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. Haolan Liao & Rong Ren & Lu Li, 2023. "Existing Building Renovation: A Review of Barriers to Economic and Environmental Benefits," IJERPH, MDPI, vol. 20(5), pages 1-23, February.
    2. Zhang, Yanzi & Berenguer, Gemma & Zhang, Zhi-Hai, 2024. "A subsidized reverse supply chain in the Chinese electronics industry," Omega, Elsevier, vol. 122(C).

    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. Liao, Haolan & Zhang, Qingyu & Shen, Neng & Nie, Yongyou & Li, Lu, 2021. "Coordination between forward and reverse production streams for maximum profitability," Omega, Elsevier, vol. 104(C).
    2. 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.
    3. Zhang, Abraham & Wang, Jason X. & Farooque, Muhammad & Wang, Yulan & Choi, Tsan-Ming, 2021. "Multi-dimensional circular supply chain management: A comparative review of the state-of-the-art practices and research," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    4. Zhu, Xiaoxi & Wang, Miaomiao & Chen, Guofu & Chen, Xiaoshan, 2016. "The effect of implementing trade-in strategy on duopoly competition," European Journal of Operational Research, Elsevier, vol. 248(3), pages 856-868.
    5. Pietro Giovanni & Georges Zaccour, 2019. "A selective survey of game-theoretic models of closed-loop supply chains," 4OR, Springer, vol. 17(1), pages 1-44, March.
    6. Ehsan Shekarian & Simme Douwe Flapper, 2021. "Analyzing the Structure of Closed-Loop Supply Chains: A Game Theory Perspective," Sustainability, MDPI, vol. 13(3), pages 1-32, January.
    7. Xiong, Yu & Zhou, Yu & Li, Gendao & Chan, Hing-Kai & Xiong, Zhongkai, 2013. "Don’t forget your supplier when remanufacturing," European Journal of Operational Research, Elsevier, vol. 230(1), pages 15-25.
    8. Hong Sun & Yan Li, 2023. "Optimal Acquisition and Production Policies for Remanufacturing with Quality Grading," Mathematics, MDPI, vol. 11(7), pages 1-21, March.
    9. Qiao, Haike & Su, Qin, 2021. "Distribution channel and licensing strategy choice considering consumer online reviews in a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    10. Pietro De Giovanni & Georges Zaccour, 2022. "A selective survey of game-theoretic models of closed-loop supply chains," Annals of Operations Research, Springer, vol. 314(1), pages 77-116, July.
    11. Ze-Bin Wang & Yao-Yu Wang & Jian-Cai Wang, 2016. "Optimal distribution channel strategy for new and remanufactured products," Electronic Commerce Research, Springer, vol. 16(2), pages 269-295, June.
    12. Matsui, Kenji, 2022. "Optimal timing of acquisition price announcement for used products in a dual-recycling channel reverse supply chain," European Journal of Operational Research, Elsevier, vol. 300(2), pages 615-632.
    13. Rafael Diaz & Erika Marsillac, 2017. "Evaluating strategic remanufacturing supply chain decisions," International Journal of Production Research, Taylor & Francis Journals, vol. 55(9), pages 2522-2539, May.
    14. Agrawal, Saurabh & Singh, Rajesh K. & Murtaza, Qasim, 2015. "A literature review and perspectives in reverse logistics," Resources, Conservation & Recycling, Elsevier, vol. 97(C), pages 76-92.
    15. Jalali, Hamed & Ansaripoor, Amir H. & De Giovanni, Pietro, 2020. "Closed-loop supply chains with complementary products," International Journal of Production Economics, Elsevier, vol. 229(C).
    16. Zhou, Yu & Xiong, Yu & Jin, Minyue, 2021. "Less is more: Consumer education in a closed-loop supply chain with remanufacturing," Omega, Elsevier, vol. 101(C).
    17. Patricia van Loon & Luk N. Van Wassenhove & Ales Mihelic, 2022. "Designing a circular business strategy: 7 years of evolution at a large washing machine manufacturer," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1030-1041, March.
    18. Gong, Hailei & Zhang, Zhi-Hai, 2022. "Benders decomposition for the distributionally robust optimization of pricing and reverse logistics network design in remanufacturing systems," European Journal of Operational Research, Elsevier, vol. 297(2), pages 496-510.
    19. 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.
    20. Wang, Junbin & Zhang, Ting & Fan, Xiaojun, 2020. "Reverse channel design with a dominant retailer and upstream competition in emerging markets: Retailer- or manufacturer- collection?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(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:eee:transe:v:170:y:2023:i:c:s1366554523000108. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    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.