A comparison of inventory control policies for a joint manufacturing/Remanufacturing environment with remanufacturing yield loss

We consider a joint manufacturing / remanufacturing environment with remanufacturing yield loss. Demand and return follow independent stationary Poisson processes. Returns can be disposed off upon arrival to the system. Manufacturing and remanufacturing operations performed in the same facility at exponential rates. Yield information becomes available after remanufacturing. Demands that are not directly satisfied are lost. We investigate what inventories to consider when making production and disposal decisions, with the objective of maximizing the long-run average expected profit. Four different policies are compared that base disposal decisions on either the local (returns) inventory or the global inventory, and production decisions on either the local (serviceable) inventory or the global inventory. By modelling the system as a Markov process, expressions for the profit associated with each policy are derived. An extensive numerical study shows that it is always optimal to base disposal decisions on the local inventory and production decisions on the global inventory within the parameter sets considered. A sensitivity analysis reveals further insights.inventory control;product returns;remanufacturing;yield loss

Determination of recovery effort for a probabilistic recovery system under various inventory control policies

In this study we investigate the desired level of recovery under various inventory control policies when the success of recovery is probabilistic. Recovery process is modelled as a single stage operation and recovery effort is represented by the expected time spent for it. The effect of increasing recovery effort on the success probability together with unit cost of the operation is included by assuming general forms of dependencies. The desired level of recovery is investigated under four inventory control policies for a wide range of system parameters. In this article, we present our computational results and their managerial implications.inventory control;probabilistic recovery

Assessing the benefits of remanufacturing option under one-way substitution and capacity constraint

In this article, we investigate the profitability of remanufacturing option when the manufactured and remanufactured products are segmented to different markets and the production capacity is finite. It is assumed that remanufactured products can be substituted by the manufactured ones. A single period profit model under substitution is constructed to investigate the system conditions under which remanufacturing is profitable. We present analytical findings and computational results to show profitability of remanufacturing option under substitution policy subject to a capacity constraint of the joint manufacturing/remanufactruing facility

A Multi-Item Inventory Model With Joint Setup And Concave Production Costs

The present paper discusses an approach to solve the joint replenishment problem in a production environment with concave production cost functions. Under this environment, the model leads to a global optimization problem, which is investigated by using some standard results from convex analysis. Consequently, an effective solution procedure is proposed. The proposed procedure is guaranteed to return a solution with a predetermined quality in terms of the objective function value. A computational study is provided to illustrate the performance of the proposed solution procedure with respect to the running time

A Deterministic Inventory/Production Model with General Inventory Cost Rate Function and Concave Production Costs

We present a thorough analysis of the economic order quantity model with shortages under a general inventory cost rate function and concave production costs. By using some standard results from convex analysis, we show that the model exhibits a composite concave-convex structure. Consequently, an effective solution procedure, particularly useful for an approximation scheme, is proposed. A computational study is appended to illustrate the performance of the proposed solution procedure

A comparison of inventory control policies for a joint manufacturing/Remanufacturing environment with remanufacturing yield loss

We consider a joint manufacturing / remanufacturing environment with remanufacturing yield loss. Demand and return follow independent stationary Poisson processes. Returns can be disposed off upon arrival to the system. Manufacturing and remanufacturing operations performed in the same facility at exponential rates. Yield information becomes available after remanufacturing. Demands that are not directly satisfied are lost. We investigate what inventories to consider when making production and disposal decisions, with the objective of maximizing the long-run average expected profit. Four different policies are compared that base disposal decisions on either the local (returns) inventory or the global inventory, and production decisions on either the local (serviceable) inventory or the global inventory. By modelling the system as a Markov process, expressions for the profit associated with each policy are derived. An extensive numerical study shows that it is always optimal to base disposal decisions on the local inventory and production decisions on the global inventory within the parameter sets considered. A sensitivity analysis reveals further insights

Determination of recovery effort for a probabilistic recovery system under various inventory control policies

In this study we investigate the desired level of recovery under various inventory control policies when the success of recovery is probabilistic. Recovery process is modelled as a single stage operation and recovery effort is represented by the expected time spent for it. The effect of increasing recovery effort on the success probability together with unit cost of the operation is included by assuming general forms of dependencies. The desired level of recovery is investigated under four inventory control policies for a wide range of system parameters. In this article, we present our computational results and their managerial implications

Dynamic lot sizing with product returns

We address the dynamic lot sizing problem for systems with product returns. The demand and return amounts are deterministic over the finite planning horizon. Demands can be satisfied by manufactured/procured new items, but also by remanufactured returned items. The objective is to determine those lot sizes for manufacturing and remanufacturing that minimize the total cost composed of holding cost for returns and serviceable products and set-ups costs. Two different set-up cost schemes are considered; there is either a joint set-up cost for manufacturing and remanufacturing (single production line) or separate set-up costs (dedicated production lines). For the joint set-up cost case, we present an exact, polynomial time dynamic programming algorithm. For both cases, we propose a number of heuristics and test them in an extensive numerical study

Multi-item two echelon spare parts inventory control problem with batch ordering in the central warehouse under compound Poisson demand

We consider a multi-item two-echelon spare part inventory system in which the central warehouse operates under an (nQ,¿R) policy and the local warehouses implement order-up-to S policy, each facing a compound Poisson demand. The objective is to find the policy parameters minimizing expected system-wide inventory holding and fixed ordering costs subject to an aggregate mean response time constraint at each warehouse. In this paper, we propose four alternative approximations for the steady state performance of the system; and extend a heuristic and a lower bound proposed under Poisson demand assumption to the compound Poisson setting. In a computational study, we show that the performances of the approximations, the heuristic, and the lower bound are quite satisfactory; and the relative cost saving of setting an aggregate service level rather than individually for each part is quite high

An exact solution procedure for multi-item two-echelon spare parts inventory control problem with batch ordering in the central warehouse

We consider a multi-item two-echelon inventory system in which the central warehouse operates under a (Q,R) policy, and the local warehouses implement basestock policy. An exact solution procedure is proposed to find the inventory control policy parameters that minimize the system-wide inventory holding and fixed ordering cost subject to an aggregate mean response time constraint at each facility