Inventory policies for joint remanufacturing and manufacturing have recently received much attention. Most efforts, though, were related to (optimal) policy structures and numerical optimization, rather than closed form expressions for calculating near optimal policy parameters. The focus of this paper is on the latter. We analyze an inventory system with unit product returns and demands where remanufacturing is the cheaper alternative for manufacturing. Manufacturing is also needed, however, since there are less returns than demands. The cost structure consists of setup costs, holding costs, and backorder costs. Manufacturing and remanufacturing orders have non-zero lead times. To control the system we use certain extensions of the familiar (s, Q) policy, called push and pull remanufacturing policies. For all policies we present simple, closed form formulae for approximating the optimal policy parameters under a cost minimization objective. In an extensive numerical study we show that the proposed formulae lead to near-optimal policy parameters.

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Keywords heuristics, inventory control, remanufacturing
JEL Optimization Techniques; Programming Models; Dynamic Analysis (jel C61), Business Administration and Business Economics; Marketing; Accounting (jel M), Production Management (jel M11), Transportation Systems (jel R4)
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Series ERIM Top-Core Articles
Journal European Journal of Operational Research
van der Laan, E.A, & Teunter, R.H. (2006). Simple heuristics for push and pull remanufacturing policies. European Journal of Operational Research, 175(2), 1084–1102. doi:10.1016/j.ejor.2005.06.030