Optimal location and value of timely sorting of used items in a remanufacturing supply chain with multiple collection sites

We study a supply chain consisting of a central remanufacturing facility and a number of collection sites (CS). The central facility procures returned items from the CS for remanufacturing and sale. We examine whether it is advisable to establish a sorting procedure that identifies those units that are suitable for remanufacturing before disassembly. Sorting is subject to classification errors and may be performed either centrally or locally at the CS. Assuming stochastic demand, infinite horizon and deterministic yield at the CS we obtain the optimal parameters of the replenishment policy under each one of the three possible system configurations: no sorting, central sorting and local sorting. It is then easy to determine the value of sorting and the preferred CS for the procurement of returned items.