Sustainability has become a major issue in most economies, causing many leading companies to focus on product recovery and reverse logistics. This research is focused on product recovery, and in particular on production control and inventory management in the remanufacturing context. We study a remanufacturing facility that receives a stream of returned products according to a Poisson process. Demand is uncertain and also follows a Poisson process. The decision problems for the remanufacturing facility are when to release returned products to the remanufacturing line and how many new products to manufacture. We assume that remanufactured products are as good as new. In this paper, we employ a "push" policy that combines these two decisions. It is well known that the optimal policy parameters are difficult to find analytically; therefore, we develop several heuristics based on traditional inventory models. We also investigate the performance of the system as a function of return rates, backorder costs and manufacturing and remanufacturing lead times; and we develop approximate lower and upper bounds on the optimal solution. We illustrate and explain some counter-intuitive results and we test the performance of the heuristics on a set of sample problems. We find that the average error of the heuristics is quite low.

environment, heuristics, inventory, remanufacturing, reverse logistics
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)
Erasmus Research Institute of Management
hdl.handle.net/1765/188
ERIM Report Series Research in Management
Copyright 2002, B. Mahadevan, D.F. Pyke, M. Fleischmann, This report in the ERIM Report Series Research in Management is intended as a means to communicate the results of recent research to academic colleagues and other interested parties. All reports are considered as preliminary and subject to possibly major revisions. This applies equally to opinions expressed, theories developed, and data used. Therefore, comments and suggestions are welcome and should be directed to the authors.
Erasmus Research Institute of Management

Mahadevan, B, Pyke, D.F, & Fleischmann, M. (2002). Periodic Review, Push Inventory Policies for Remanufacturing (No. ERS-2002-35-LIS). ERIM Report Series Research in Management. Erasmus Research Institute of Management. Retrieved from http://hdl.handle.net/1765/188