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Determining the Optimal Inventory and Number of Shipments for a Two-Resource Supply Chain with Correlated Demands and Remanufacturing Products Allowing Backorder

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  • Tseng-Fung Ho

    (Department of Industrial Engineering and Management, National Chin-Yi University of Technology, Taichung 41170, Taiwan)

  • Chi-Chung Lin

    (Department of Industrial Engineering and Management, National Chin-Yi University of Technology, Taichung 41170, Taiwan)

  • Chih-Ling Lin

    (Department of International Business, Central Taiwan University of Science and Technology, No.666, Buzih Road, Beitun District, Taichung 40601, Taiwan)

Abstract

This study develops an integrated supplier–remanufacturer and customer (downstream manufacturer) inventory model that takes into account three-echelon system with correlated demands and remanufacturing products allowing a backorder goods condition. This paper improves the observable fact that the first model system customer might select two sources from remanufactured products or supplier products without defective items. The second model further considers the defective items during the screening duration. The results are examined analytically and numerically to show that the policy of single shipment in large lot sizes results in less total cost than a frequent shipments policy. We also explore the impact of recovery rate on the economic benefits of the inventory system. In addition, we also perform sensitivity analysis to study the impact of seven important parameters (transportation cost, recovery rate, screening rate, annual demand, defect rate, and backorder rate, holding cost,) on the optimal solution. Management insights were also discussed.

Suggested Citation

  • Tseng-Fung Ho & Chi-Chung Lin & Chih-Ling Lin, 2020. "Determining the Optimal Inventory and Number of Shipments for a Two-Resource Supply Chain with Correlated Demands and Remanufacturing Products Allowing Backorder," Mathematics, MDPI, vol. 8(4), pages 1-16, April.
    • Handle: RePEc:gam:jmathe:v:8:y:2020:i:4:p:548-:d:342883
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    References listed on IDEAS

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    1. K. Jeganathan & S. Selvakumar & S. Saravanan & N. Anbazhagan & S. Amutha & Woong Cho & Gyanendra Prasad Joshi & Joohan Ryoo, 2022. "Performance of Stochastic Inventory System with a Fresh Item, Returned Item, Refurbished Item, and Multi-Class Customers," Mathematics, MDPI, vol. 10(7), pages 1-37, April.

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