Coordinating production and recycling decisions with stochastic demand and return

In this paper, the joint production and recycling problem is investigated for a hybrid manufacturing and remanufacturing system where brand-new products are produced in the manufacturing plant and recycled products are remanufactured into as-new products in the remanufacturing facility. Both the brand-new products and remanufactured products are used to satisfy customer demands. Returns of used products that are recycled from customers are assumed to be stochastic and nonlinearly price-dependent. A mathematical model is proposed to maximize the overall profit of the system through simultaneously optimizing the production and recycling decisions, subject to two capacity constraints — the manufacturing capacity and the remanufacturing capacity. Based on Lagrangian relaxation method, subgradient algorithm and heuristic algorithm, a solution approach is developed to solve the problem. A representative example is presented to illustrate the system, and managerial analysis indicates that the uncertainties in demand and return have much influence on the production and recycling policy. In addition, twenty randomly produced examples are solved, and computational results show that the solution approach can obtain very good solutions for all examples in reasonable time.

[1]  Erwin van der Laan,et al.  Quantitative models for reverse logistics: A review , 1997 .

[2]  C. Carter,et al.  REVERSE LOGISTICS: A REVIEW OF THE LITERATURE AND FRAMEWORK FOR FUTURE INVESTIGATION , 1998 .

[3]  Maqbool Dada,et al.  Pricing and the Newsvendor Problem: A Review with Extensions , 1999, Oper. Res..

[4]  Rommert Dekker,et al.  Inventory Control in Hybrid Systems with Remanufacturing , 1999 .

[5]  W. C. Benton,et al.  Supply-Chain Management for Recoverable Manufacturing Systems , 2000, Interfaces.

[6]  V. Guide,et al.  Production planning and control for remanufacturing: industry practice and research needs , 2000 .

[7]  Shad Dowlatshahi,et al.  Developing a Theory of Reverse Logistics , 2000, Interfaces.

[8]  Simme Douwe Flapper,et al.  Product recovery in stochastic remanufacturing systems with multiple reuse options , 2001, Eur. J. Oper. Res..

[9]  Erwin van der Laan,et al.  Leadtime effects and policy improvement for stochastic inventory control with remanufacturing , 2001 .

[10]  Rommert Dekker,et al.  Controlling inventories with stochastic item returns: A basic model , 2002, Eur. J. Oper. Res..

[11]  Roelof Kuik,et al.  On optimal inventory control with independent stochastic item returns , 2003, Eur. J. Oper. Res..

[12]  Ruud H. Teunter,et al.  Matching Demand and Supply to Maximize Profits from Remanufacturing , 2003, Manuf. Serv. Oper. Manag..

[13]  Carlton H. Scott,et al.  Model for the allocation of electronics components to reuse options , 2004 .

[14]  K. Inderfurth.  Optimal policies in hybrid manufacturing/remanufacturing systems with product substitution , 2004 .

[15]  K. Inderfurth.  Impact of uncertainties on recovery behavior in a remanufacturing environment , 2005 .

[16]  Mohamed Mohamed Naim,et al.  Dynamic performance of a hybrid inventory system with a Kanban policy in remanufacturing process , 2006 .

[17]  Vaidyanathan Jayaraman,et al.  Production planning for closed-loop supply chains with product recovery and reuse: an analytical approach , 2006 .

[18]  K. Richter,et al.  A production/recycling model with quality consideration , 2006 .

[19]  Bongju Jeong,et al.  Supply planning model for remanufacturing system in reverse logistics environment , 2006, Comput. Ind. Eng..

[20]  Hark Hwang,et al.  A generalized ordering and recovery policy for reusable items , 2007, Eur. J. Oper. Res..

[21]  S. Mitra.  Revenue management for remanufactured products , 2007 .

[22]  Xiuli Qu,et al.  An analytical model for reverse automotive production planning and pricing , 2008, Eur. J. Oper. Res..

[23]  Albert Corominas,et al.  Optimal manufacturing-remanufacturing policies in a lean production environment , 2008, Comput. Ind. Eng..

[24]  Sergio Rubio,et al.  Characteristics of the research on reverse logistics (1995–2005) , 2008 .

[25]  Akshay Mutha,et al.  Perspectives in reverse logistics : A review , 2009 .

[26]  V. Daniel R. Guide,et al.  OR FORUM - The Evolution of Closed-Loop Supply Chain Research , 2009, Oper. Res..

[27]  L. V. Wassenhove,et al.  MANAGING PRODUCT RETURNS FOR REMANUFACTURING , 2001 .

[28]  Shaligram Pokharel,et al.  Pricing used products for remanufacturing , 2009, Eur. J. Oper. Res..

[29]  Vedat Verter,et al.  Coordination and Priority Decisions in Hybrid Manufacturing/Remanufacturing Systems , 2006 .

[30]  Ismail Serdar Bakal,et al.  Effects of Random Yield in Remanufacturing with Price‐Sensitive Supply and Demand , 2006 .

[31]  Guoqing Zhang,et al.  Supply planning for a closed-loop system with uncertain demand and return , 2011 .