Mathematical models of inventory
Product remanufacturing and disposal: A numerical comparison of alternative control strategies

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Abstract

In this paper we consider a single-product, single-echelon production and inventory system with product returns, product remanufacturing, and product disposal. For this system we consider three different procurement and inventory control strategies i.e., the (sp, Qp, sd,N) strategy, the (sp, Qp, sd) strategy, and the (sp, Qp, N) strategy. The control parameters in these strategies relate to the inventory position at which an outside procurement order is placed (sp), the inventory position at which returned products are disposed of (sd), the outside procurement order quantity (Qp), and the capacity of the remanufacturing facility (N). For each of the strategies we derive exact expressions of the total expected costs as functions of the control parameters. Main objective of this paper is to compare the performance of each of the alternative strategies with respect to costs, under different system conditions.

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    Manufacturing and remanufacturing lead times are distributed normally with a constant variance of one and unsatisfied demand is lost. Similar assumptions are commonly made in the extant literature (Laan et al., 1996; Bayındır et al., 2003, 2005; Zanoni et al., 2006; Behret and Korugan, 2009; Mahadevan et al., 2003). The unit costs of the returned product, remanufactured product and manufactured product are set to $20, $110 and $200 respectively.

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