Strategic Remanufacturing Decision in a Supply Chain with an External Local Remanufacturer

This paper develops a model for remanufacturing decisions in a two-stage supply chain with one manufacturer, one retailer and one external local remanufacturer, who collects used products and then reproduces them into a new one if the manufacturer does not join in remanufacturing process. This paper is different from most of the extant studies about remanufacturing because they consider decisions of firms rather than supply chains. We mainly focus on the remanufacturing strategy of the manufacturer when there is a local remanufacturer. We derive the equilibrium results for all players and do some comparative studies under different cases. We find that product substitutability can invert the effect of manufacturer’s extension decision on the retailer’s profit. We also consider the effect of channel structure by comparing the decentralized channel with the centralized channel. We find that the manufacturer has a higher incentive to extend its product line in the centralized channel than the decentralized channel; and the competition can strengthen its motivation to extend the line

Analysis of the Supply Chain Disruption Risks in the Malaysian Automotive Remanufacturing Industry- a Case Study

Remanufacturing has now become one of the effective strategies for reducing the negative impact on the environment by prolonging the products’ life cycle in the automotive sector. Still considered as a relatively new industry in Malaysia, the low remanufacturing rate coupled with the lack of standardization are thus seen as causing a high inclination of disruption occurrences in the remanufacturing operations. As such, this paper had identified and investigated the existing disruptions in four problematic areas, namely the production planning, infrastructure facilities, distribution networking and inventory management of the automotive remanufacturing firms in Malaysia. From the SPSS analysis and calculation of the mean and standard deviation values on the semi-structured interviews that were conducted in three remanufacturing companies, the highest contributor to the disruption risks was found to have resulted from the difficulty in obtaining the spare parts components in the production planning process. By also exploring the awareness level on environmental sustainability and the significance of remanufacturing processes among the remanufacturer companies, this analysis is thus deemed useful for not only identifying suitable actions that can be taken for mitigating the various risks faced by the automotive remanufacturers in Malaysia, but also in solving the disruptions of the remanufacturing supply chain system

Optimal Decision Making for Capacitated Reverse Logistics Networks with Quality Variations

Increasing concerns about the environmental impact of production, product take-back laws and dwindling natural resources have heightened the need to address the impact of disposing end-of-life (EOL) products. To cope this challenge, manufacturers have integrated reverse logistics into their supply chain or chosen to outsource product recovery activities to third party firms. The uncertain quality of returns as well as uncertainty in return flow limit the effectiveness of planning, control and monitoring of reverse logistics networks. In addition, there are different recovery routes for each returned product such as reuse, repair, disassembling, remanufacturing and recycling. To determine the most profitable option for EOL product management, remanufacturers must consider the quality of returns and other limitations such as inventory size, demand and quantity of returns. The work in this dissertation addresses these pertinent aspects using two models that have been motivated by two remanufacturing facilities whereby there are uncertainties in the quality and quantity of return and capacitated inventories. In the first case, a disposition decision making model is developed for a remanufacturing process in which the inventory capacity of recoverable returns is limited and where there\u27s a constant demand to be met, for remanufactured products that meet a minimum quality threshold. It is assumed that the quality of returns is uncertain and remanufacturing cost is dependent on the quality grade. In this model, remanufacturing takes place when there is demand for remanufactured products. Accepted returns that meet the minimum quality threshold undergo the remanufacturing processes, and any unacceptable returns are salvaged. A continuous time Markov chain (CTMC) is presented as the modeling approach. The Matrix-Geometric solution methodology is applied to evaluate several key performance metrics for this system, to result in the optimal disposition policy. The numerical study shows an intricate trade-off between the acceptable quality threshold value and the recoverable product inventory capacity. Particularly, there are periodic system starvation whenever there is a mis-match between these two system metrics. In addition, the sensitivity analysis indicates that changes to the demand rate for remanufactured products necessitates the need to re-evaluate the existing system configuration. In the second case, a general framework is presented for a third party remanufacturer, where the remanufacturer has the alternative of salvaging EOL products and supplying parts to external suppliers, or remanufacture the disassembled parts to \u27as new\u27 conditions. The remanufacturing processes of reusable products and parts is studied in the context of other process variables such as the cost and demand of remanufactured products and parts. The goal of this model is to determine the return quality thresholds for a multi-product, multi-period remanufacturing setting. The problem is formulated as a mixed integer non-linear programming (MINLP) problem, which involves a discretization technique that turns the problem turns into a quadratic mixed integer programming (QMIP) problem. Finally, a numerical analysis using a personal computer (PC) remanufacturing facility data is used to test the extent to which the minimum acceptance quality threshold is dependent on the inventory level capacities of the EOL product management sites, varying operational costs and the upper bound of disposal rate

Stakeholder considerations in remanufacturability decision-making : findings from a systematic literature review

Remanufacturing is a sustainable product recovery strategy with environmental, economic and social benefits. Remanufacturability assessment, the process of deciding whether or not to remanufacture an end-of-life or end-of-use product, is complex and has a high level of uncertainty. Several tools and methods have been proposed to reduce this complexity without compromising the effectiveness and inclusiveness of the process. However, there is a lack of comprehensive review of the decision factors and how they fulfil the requirements of different stakeholders that are critical to the success of remanufacturing systems. This study fills the gap by performing a systematic literature review of decision factors with the aim of understanding how the requirements of stakeholders have been accounted for in remanufacturability decision-making. Decision factors that have been used to represent the different stakeholders were identified and discussed. Findings revealed the lack of research on including consumer requirements in remanufacturability decision-making. Future research should focus on bridging the gap between consumers and other stakeholders, especially during the remanufacturability decision-making process. The novelty is that this is the first study that comprehensively reviews decision factors in remanufacturability assessment from the perspectives of the different stakeholders and provide insights on the impact of consumer requirements on remanufacturability decision-making

Pre-processing inspection – a worthwhile activity for remanufacturers

Remanufacture, a process to return used product to an "as-new" condition with an equivalent quality, is typically carried out on complex mechanical assemblies as the remaining value in the used product is high. Remanufacturing is often a more efficient reuse strategy than recycling as, in addition to the reduction in landfill and the use of virgin material, it also reduces the amount of energy used in successive applications by removing raw material production and any subsequent manufacturing processes, thus increasing profitability for the remanufacturer. There remain barriers to remanufacturing particularly around the paucity of research into the field. Guide identified that remanufacturers perceive the scarcity of effective remanufacturing tools and techniques as a key threat to the industry. Ijomah quantified these key characteristics on a five-point scale ranging from "Not Significant through to "Critical". The only characteristic rated "critical" by remanufacturers was component inspection. Personal experience and observation of the remanufacturing process has shown that this remanufacturing sub-activity, although it can have significant bearing on overall productivity, is undertaken in a hap-hazard manner based almost purely on experience and guesswork and lacks proper methodologies and tools. This paper presents the results of quantitative doctoral research, conducted in a Caterpillar Remanufacturing UK facility, to establish the relationship between pre-processing inspection and the subsequent remanufacturing process time for returned used products known as cores. It concludes that for components (i.e. cores) having either complex geometry (such as internal ports), a large number of sub-components or that are constructed from, or comprising of, multiple materials, the remanufacturing process is shortened by increased inspection prior to processing. However, these benefits are currently limited by the amount of information that can be gained from the inspection methods used. It describes the practical use of these factors in a decision-making methodology for inspection

Structural and Pricing Decisions in Manufacturing/Remanufacturing Systems with Vertically Differentiated Products

This research encompasses three related papers to address some of the influencing factors in structural and pricing decisions in supply chains with manufacturing and remanufactunng. We consider new and remanufactured products that are vertically differentiated, that is, the consumers perceive the remanufactured product as of a lower quality and thus they are not willing to pay for them as much as they would for the new product. Examples of such products are seen in computer systems, automotive parts and office equipment. In the first paper, we consider a closed loop supply chain that includes a manufacturer, a remanufacturer and a retailer. We investigate the pricing decisions for the new and remanufactured products under different coordination structures between members of the chain while taking into account the consumers’ perception of the remanufactured product versus new and the quality of returns as two major parameters. In addition, we find which coordination structure is a better option for the closed loop supply chain members. Particularly, we find that although a lower price is charged for the new product when the retailer and the remanufacturer are coordinated (RREMC) compared to the completely decentralized (CD) structure, a higher number of new products are sold in the completely decentralized structure. A similar result is found for the remanufactured product when comparing the CD structure with the one in which the retailer and manufacturer are coordinated (MRC). We also find that MRC results in the highest total profit while RREMC results in the lowest. In the second paper, we analyze the pricing decisions for a firm that produces both new and remanufactured products and also collects the used product returns (known as cores, which are used in remanufacturing). The firm needs to define the core acquisition price as well as the selling prices for both new and remanufactured products. In our models, we capture the quality of returns (by assuming a stochastic collection yield rate) and the competition between new and remanufactured products, and show how they influence the optimal expected prices and profit of the firm. We provide managerial insight on how varying the optimal prices could help the firm optimally accommodate for different conditions (i.e. with respect to changes in the consumers’ perceptions of the products, the yield rate, and the salvage value of the cores). For example, we find that when the firm sells low margin products, a small change in the consumers’ perception of the remanufactured products versus new could increase the firm’s expected profit by more than 10%. Finally, in the third paper, we consider two core collection structures for a firm that produces both new and remanufactured products. In the first structure (known as the centralized channel), the firm collects the cores directly from the consumers, while in the second structure (known as the decentralized channel), the firm uses a third-party collector to take care of the core acquisition We assume that the demands for new and remanufactured products are influenced by the product prices and also by a stochastic component. We jointly find the optimal prices and lot sizes for each product and investigate the impact of the competition between products (i.e. consumers’ perception of the remanufactured product versus new), the quality of returns (i.e. the collection yield rate) and the demand uncertainties on the optimal solution in each channel. Furthermore, we compare the channels on the amount of change in their optimal values and expected profits with respect to changes in the parameters We also provide managerial insight on how the firm should change the optimal prices and lot sizes in each channel considering possible changes in the consumers’ perception of the products, the collection yield rate and the demand uncertainties. For example, we find that when the demand uncertainties for the new and remanufactured products are higher, the reduction in the firm’s profit is about 2-3% less in the centralized channel compared to the decentralized one

판매촉진을 도입한 수요 불확실성 재고관리 모형

학위논문 (박사) -- 서울대학교 대학원 : 공과대학 산업공학과, 2020. 8. 문일경.As the globalization of markets accelerates competition among companies, sales promotion, which refers to short-term incentives promoting sales of products or services, plays a prominent role. Although there are various types of sales promotions, such as price reduction, buy-x-get-y-free, and trade-in program, the common purpose is to induce the purchase of customers by offering benefits. This successful strategy has caught the attention of researchers, including operations management and supply chain management. Thus, various studies have been conducted to examine strategies for ongoing operations and to demonstrate the effects of the sales promotion, which are based on the strategic level. However, research at the tactical or operational level has been conducted insufficiently. This dissertation examines the inventory models considering (i) markdown sale, (ii) buy one get one free (BOGO), and (iii) trade-in program. First, the newsvendor model is considered. By introducing the decision variable, which represents the start time of markdown sale, the retailer can obtain the optimal combination of the start time of a markdown sale and an order quantity. Under certain conditions in a decentralized system, however, the start time of a markdown sale where the retailer obtains the highest profit is the least profitable for the manufacturer. To avoid irrational ordering behavior by a retailer against a manufacturer, a revenue-sharing contract is proposed. Second, the mobile application, ``My Own Refrigerator'', is considered in the inventory model. It enables customers to store BOGO products in their virtual storage for later use. That is, customers can drop by the store to pick up the extra freebies in the future. The promotion involves a high degree of uncertainty regarding the revisiting date because customers who buy the product do not need to take both products on the day of purchase. To deal with this uncertainty, we propose a robust multiperiod inventory model by addressing the approximation of a multistage stochastic optimization model. Third, the trade-in program is considered. It is one of the sales promotions that companies collect used old-generation products from customers and provide them with new-generation products at a discount price. It also helps to acquire the additional products which are required for the refurbishment service. A multiperiod stochastic inventory model based on the closed-loop supply chain system is proposed by incorporating the trade-in program and refurbishment service simultaneously. The stochastic optimization model is approximated to the robust counterpart, which features a deterministic second-order cone program.시장의 세계화에 따른 기업 간의 경쟁이 가속화됨에 따라, 단기 인센티브를 통해 고객의 제품 또는 서비스 구매를 유도하는 판매촉진의 역할이 중요해졌다. 가격 인하, 행사상품 증정, 트레이드인프로그램과 같은 다양한 유형의 판매촉진 전략이 존재하지만, 공통된 주요 목적은 기업이 고객에게 혜택을 제공하여 고객의 수요를 증대시키는 것이다. 판매촉진의 성공적인 전략은 경영과학 또는 공급망관리 분야를 포함한 관련 학계의 관심을 이끌었다. 지속적인 운영을 위한 전략을 검토하고 전략적 수준 계획을 기반으로 하는 판매 촉진의 효과를 입증하기 위한 다양한 연구가 수행되었습니다. 하지만 운영 수준의 소매업체 입장에서의 연구는 미흡한 실정이다. 본 논문에서는 (i) 마크 다운 (ii) buy one get one free (BOGO), 및 (iii) 트레이드인프로그램을 고려한 재고관리모형을 다룬다. 먼저, 신문가판원 모형에 마크 다운 시작 시점을 나타내는 결정 변수를 도입하여 최적의 마크 다운 시작 시점과 주문량의 조합을 제공하는 모형을 제안한다. 분산 시스템의 특정 조건에서는 소매업자가 가장 높은 이익을 얻는 시점이 제조업자에게 낮은 수익성을 야기할 수 있다. 따라서 본 연구는 제조업자에 대한 소매업자의 비합리적 주문을 막기 위한 이익분배계약을 제안한다. 이익분배계약을 통한 중앙집권화 시스템은 분산 시스템에서 얻은 이익에 비해 소매업자와 제조업자의 이익을 향상시킴을 수치실험을 통해 확인하였다. 둘째, 모바일 어플리케이션 ``나만의 냉장고''를 고려한 재고모형을 고려한다. 이 앱을 통해 BOGO 행사제품을 구매한 고객은 증정품을 구매 당일 날 가져가지 않고 미래에 재방문하여 수령할 수 있는 혜택을 받는다. 하지만 소매업자 입장에서는 고객이 증정품을 언제 수령해 갈 지에 대한 불확실성이 존재하며 이는 기존의 재고관리 운영방식에는 한계점이 있음을 시사한다. 본 연구에서는 고객의 재방문에 대한 불확실성을 고려한 복수기간 추계계획 재고모형을 수립하며 이를 효율적으로 계산하기 위한 강건최적화 모형으로 근사화하였다. 셋째, 리퍼서비스와 트레이드인프로그램을 고려한 폐회로 공급망 시스템 기반의 복수기간 재고관리모형을 제안한다. 신세대 제품, 리퍼서비스 및 트레이드인프로그램에 대한 세 가지 유형의 불확실한 수요에 대한 상관관계를 반영함에 따라 복수기간 추계계획 재고모형이 수립된다. 복수기간 추계계획 재고모형의 계산이 어렵다는 한계를 극복하고자 강건최적화 모형으로 근사화하였다.Chapter 1 Introduction 1 1.1 Sales promotion 1 1.2 Inventory management 3 1.3 Research motivations 6 1.4 Research contents and contributions 8 1.5 Outline of the dissertation 10 Chapter 2 Optimal Start Time of a Markdown Sale Under a Two-Echelon Inventory System 11 2.1 Introduction and literature review 11 2.2 Problem description 17 2.3 Analysis of the decentralized system 21 2.3.1 Newsvendor model for a retailer 21 2.3.2 Solution procedure for an optimal combination of the start time of the markdown sale and the order quantity 25 2.3.3 Profi t function of a manufacturer 25 2.3.4 Numerical experiments of the decentralized system 27 2.4 Analysis of a centralized system 35 2.4.1 Revenue-sharing contract 35 2.4.2 Numerical experiments of the centralized system 38 2.5 Summary 40 2.5.1 Managerial insights 41 Chapter 3 Robust Multiperiod Inventory Model with a New Type of Buy One Get One Promotion: "My Own Refrigerator" 43 3.1 Introduction and literature review 43 3.2 Problem description 51 3.2.1 Demand modeling 52 3.2.2 Sequences of the ordering decision 54 3.3 Mathematical formulation of the IMMOR 56 3.3.1 Mathematical formulation of the IMMOR under the deterministic demand 58 3.3.2 Mathematical formulation of the IMMOR under the stochastic demand 58 3.3.3 Distributionally robust optimization approach for the IMMOR 60 3.4 Computational experiments 76 3.4.1 Experiment 1: tractability of the RIMMOR 77 3.4.2 Experiment 2: robustness of the RIMMOR 78 3.4.3 Experiment 3: e ect of duration of the expiry date under the different customers' revisiting propensities 78 3.5 Summary 83 3.5.1 Managerial insights 83 Chapter 4 Robust Multiperiod Inventory Model Considering Refurbishment Service and Trade-in Program 85 4.1 Introduction 85 4.2 Literature review 91 4.2.1 Effects of the trade-in program and strategic-level decisions for the trade-in program 91 4.2.2 Inventory or lot-sizing model in a closed-loop supply chain system 94 4.2.3 Distinctive features of this research 97 4.3 Problem description 100 4.3.1 Demand modeling 103 4.3.2 Decision of the inventory manager 105 4.4 Mathematical formulation 108 4.4.1 Mathematical formulation of the IMRSTIP under the deterministic demand model 108 4.4.2 Mathematical formulation of the IMRSTIP under the stochastic demand model 110 4.4.3 Distributionally robust optimization approach for the IMRSTIP 111 4.5 Computational experiments 125 4.5.1 Demand process 125 4.5.2 Experiment 1: tractability of the RIMRSTIP 128 4.5.3 Experiment 2: approximation error from the expected value given perfect information 129 4.5.4 Experiment 3: protection against realized uncertain factors 130 4.5.5 Experiment 4: di erences between modeling demands from VARMA and ARMA 131 4.5.6 Experiments 5 and 6: comparisons of backlogged refurbishment service with or without trade-in program 133 4.6 Summary 136 Chapter 5 Conclusions 138 5.1 Summary 138 5.2 Future research 140 Bibliography 142 Chapter A 160 A.1 160 A.2 163 A.3 163 A.4 164 A.5 165 A.6 166 Chapter B 168 B.1 168 B.2 171 B.3 172 Chapter C 174 C.1 174 C.2 174 국문초록 179Docto

Achieving quality medical equipment in developing countries through remanufacturing

Remanufacturing restores a used product to at least, its original equipment manufacturers (OEM) performance specification from the customer’s perspective and gives the resultant product a warranty that is at least equal to that of newly manufactured equivalent product. It is a wise option as it offers high quality products at lower price since remanufactured products are substantially cheaper than new products of equivalent quality. Remanufacturing also has social, economic, and environmental benefits since it has the potential to become a source of revenue, create jobs and reduce environmental pollution. While remanufacturing is common in industries such as automobile and aviation, its application and benefits in the medical device industry have not been investigated. Medical devices are crucial in the diagnosis and treatment of diseases and injuries but are inequitably distributed globally, such that there is acute shortage in developing countries with consequent high mortality rates over disease and adverse health conditions that could be treated if the right equipment were available. Several strategies have been considered to eliminate or mitigate this issue. However, neither has remanufacturing been considered a potential solution to this issue nor key factors in implementing medical equipment remanufacturing for developing countries been identified. This study proposes remanufacturing as a potential sustainable solution to this issue. The research was conducted in 3 phases following a multiphase mixed methods design. Questionnaires and interviews were used to gather data while pre-figured thematic analysis, Decision-making trial and evaluation laboratory (DEMATEL) technique and confirmatory factor analysis techniques were used to analyse the data. Main findings of this research include the following: (1) medical equipment remanufacturing can address 5 out of 11 causes of poor medical equipment availability accounting for 43.5% of the overall prominence. (2) A definition and decision support frameworks for medical equipment remanufacturing that could help to improve availability of quality medical equipment in developing countries (3) Major concerns in implementing medical equipment remanufacturing. (4) Impact of perception on the purchase intention for remanufactured medical equipment. This research is the first to identify the potential impact of remanufacturing in addressing medical equipment availability issues in developing countries, to characterise medical equipment remanufacturing towards this end. It is unique in its application of DEMATEL to the study of root causes of poor availability of medical equipment in developing countries and in applying behavioural science in understanding its purchase intentions.Remanufacturing restores a used product to at least, its original equipment manufacturers (OEM) performance specification from the customer’s perspective and gives the resultant product a warranty that is at least equal to that of newly manufactured equivalent product. It is a wise option as it offers high quality products at lower price since remanufactured products are substantially cheaper than new products of equivalent quality. Remanufacturing also has social, economic, and environmental benefits since it has the potential to become a source of revenue, create jobs and reduce environmental pollution. While remanufacturing is common in industries such as automobile and aviation, its application and benefits in the medical device industry have not been investigated. Medical devices are crucial in the diagnosis and treatment of diseases and injuries but are inequitably distributed globally, such that there is acute shortage in developing countries with consequent high mortality rates over disease and adverse health conditions that could be treated if the right equipment were available. Several strategies have been considered to eliminate or mitigate this issue. However, neither has remanufacturing been considered a potential solution to this issue nor key factors in implementing medical equipment remanufacturing for developing countries been identified. This study proposes remanufacturing as a potential sustainable solution to this issue. The research was conducted in 3 phases following a multiphase mixed methods design. Questionnaires and interviews were used to gather data while pre-figured thematic analysis, Decision-making trial and evaluation laboratory (DEMATEL) technique and confirmatory factor analysis techniques were used to analyse the data. Main findings of this research include the following: (1) medical equipment remanufacturing can address 5 out of 11 causes of poor medical equipment availability accounting for 43.5% of the overall prominence. (2) A definition and decision support frameworks for medical equipment remanufacturing that could help to improve availability of quality medical equipment in developing countries (3) Major concerns in implementing medical equipment remanufacturing. (4) Impact of perception on the purchase intention for remanufactured medical equipment. This research is the first to identify the potential impact of remanufacturing in addressing medical equipment availability issues in developing countries, to characterise medical equipment remanufacturing towards this end. It is unique in its application of DEMATEL to the study of root causes of poor availability of medical equipment in developing countries and in applying behavioural science in understanding its purchase intentions

Performance evaluation of reverse logistics enterprise – an agent-based simulation approach

Reverse logistics (RL) has been applied in many industries and sectors since its conception. Unlike forward logistics, retracing consumer goods from the point of consumption to the point of inception is not a well-studied process. It involves many uncertainties such as time, quality and quantity of returns. The returned products can be remanufactured, have parts harvested, or be disposed safely. It is important to implement these activities in a cost-effective manner. The aim of this research is to measure the performance of the RL enterprise with the help of an agent-based simulation model. The major entities in the RL network are considered as Agents that can act independently. There are several different agents: collector agent, sorting-cum-reuse agent, remanufacturing agent, recycler agent, supplier agent and distributor agent. The individual performances of the agents are measured and recommendations are given to improve their performance, leading to the enhancement of the total performance of the RL enterprise. The approach is applied to a case study involving cell phone remanufacturing