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The Effect of Remanufacturability of End-of-Use Returns on the Optimal Intertemporal Production Decisions of a Newsvendor

In: Dynamic Perspectives on Managerial Decision Making

Author

Listed:
  • Marc Reimann

    (University of Graz
    Northumbria University)

Abstract

In this paper we study a joint manufacturing–remanufacturing problem of a manufacturer under demand uncertainty. Supply of remanufacturable units is constrained by the availability of used and returned cores, which depends on previous supply of new units. Potential cost savings due to remanufacturing in later periods may induce the manufacturer to reduce its short-term profits by artificially increasing its supply in earlier periods. For dealing with this trade-off we formulate an intertemporal optimization problem in a classical two-period newsvendor setting. Exploiting first period information when taking second period supply decisions we provide analytical insights into the optimal strategy and compare this optimal strategy with a previously proposed heuristic, where both first and second period decisions are committed to prior to period 1. Through a comprehensive numerical study we evaluate the associated profit implications.

Suggested Citation

  • Marc Reimann, 2016. "The Effect of Remanufacturability of End-of-Use Returns on the Optimal Intertemporal Production Decisions of a Newsvendor," Dynamic Modeling and Econometrics in Economics and Finance, in: Herbert Dawid & Karl F. Doerner & Gustav Feichtinger & Peter M. Kort & Andrea Seidl (ed.), Dynamic Perspectives on Managerial Decision Making, pages 313-332, Springer.
    • Handle: RePEc:spr:dymchp:978-3-319-39120-5_18
    DOI: 10.1007/978-3-319-39120-5_18
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