Applying Info-Gap Theory to Remanufacturing Process Selection Affected by Severe Uncertainty

In this article, Information-Gap Decision Theory (IGDT), an approach to robust decision making under severe uncertainty, is applied to decisions about a remanufacturing process. IGDT is useful when only a nominal estimate is available for an uncertain quantity; the amount that estimate differs from the quantity’s actual value is not known. The decision strategy in IGDT involves maximizing robustness to uncertainty of unknown size, while still guaranteeing no worse than some “good enough” critical level of performance, rather than optimal performance. The design scenario presented involves selecting the types of technologies and number of stations to be used in a remanufacturing process. The profitability of the process is affected by severe uncertainty in the demand for remanufactured parts. Because nothing is know about demand except an estimate based on a different product from a previous year, info-gap theory will be used to determine an appropriate tradeoff between performance and robustness to severe uncertainty. Which design is most preferred is seen to switch depending on choice of critical performance level. Implications of findings, as well as future research directions, are discussed.Copyright © 2007 by ASME