An inventory control model with consideration of remanufacturing and product life cycle

This paper investigates inventory control policies in a manufacturing/remanufacturing system during the product life cycle, which consists of four phases: introduction, growth, maturity, and decline. Both demand rate and return rate of products are random variables with normal distribution; the mean of the distribution varies according to the time in the product life cycle. Closed-form formulas of optimal production lot size, reorder point, and safety stock in each phase of the product life cycle are derived. A numerical example is presented with sensitivity analysis. The result shows that different inventory control policies should be adopted in different phases of the product life cycle. It is also found that the optimal production lot size and reorder point are not sensitive to the phase length and the demand changing rate.     

An economic production and remanufacturing model with learning effects

Managing inventory in reverse logistics has been receiving much attention in recent years. One inventory problem that has been of interest to researchers is the production and remanufacturing model, where used items are collected and remanufactured to satisfy customer demand. The available models in the literature do not discuss the learning effects in production and remanufacturing processes. This may not be true in industries where labour costs and learning costs are expensive. By modelling these learning effects, management may use established learning models to better utilize capacity, manage inventories, and coordinate production and distribution throughout the chain.This paper extends the production, remanufacture, and waste disposal model by assuming learning to occur in both production and remanufacturing processes. However, this paper also assumes that improvements due to learning require capital investment. Mathematical models are developed, numerical examples are provided, and results are discussed.     

Considering stochastic lead times in a manufacturing/remanufacturing system with deterministic demands and returns

In this paper we study a manufacturing/remanufacturing system with stochastic lead times and a constant demand. We base our approach on previous research in which we have developed models to describe an inventory system with stochastic lead times. In this paper, we first adopt this method to manufacturing/remanufacturing situations, where there are essentially two supply sources for replenishing serviceable inventory. We then provide a solution procedure when a cycle ordering policy is used. Secondly, we investigate the possibility to use a dual sourcing ordering policy in which each order is split between a manufacturing and a remanufacturing process. Finally, we compare the two ordering policies and illustrate how the lead-time patterns influence the economic consequences.     

Production planning of a hybrid manufacturing-remanufacturing system under uncertainty within a closed-loop supply chain

This paper deals with the production planning and control of a single product involving combined manufacturing and remanufacturing operations within a closed-loop reverse logistics network with machines subject to random failures and repairs. While consumers traditionally dispose of products at the end of their life cycle, recovery of the used products may be economically more attractive than disposal, while remanufacturing of the products also pursues sustainable development goals. Three types of inventories are involved in this network. The manufactured and remanufactured items are stored in the first and second inventories. The returned products are collected in the third inventory and then remanufactured or disposed of. The objective of this research is to propose a manufacturing/remanufacturing policy that would minimize the sum of the holding and backlog costs for manufacturing and remanufacturing products. The decision variables are the production rates of the manufacturing and the remanufacturing machines. The optimality conditions are developed using the optimal control theory based on stochastic dynamic programming. A computational algorithm, based on numerical methods, is used for solving the optimal control problem. Finally, a numerical example and a sensitivity analysis are presented to illustrate the usefulness of the proposed approach. The structure of the optimal control policy is discussed depending on the value of costs and parameters and extensions to more complex reverse logistics networks are discussed.     

A production/remanufacture model with returns’ subassemblies managed differently

This paper considers a production-remanufacturing inventory model for a single product, where constant demand is satisfied from the inventory of newly produced and remanufactured items. Although the available models in the literature imply that collected used units (or returns) are disassembled for recovery purposes, these models really do not treat them as such. Contrary, the returns are assumed to be recovered as whole units, perhaps, for simplicity. This assumption may not capture the benefits reaped from product recovery programs. This paper addresses this limitation in the literature and assumes that each unit of a used product is collected and disassembled into components, where these components are sorted into subassemblies, which are fed back into the production-remanufacturing process. The returned subassemblies are remanufactured and reassembled to represent a second source of as-good-as-new units of the end-product. For this multi-component inventory problem, the question that needs to be answered is whether, or not, extreme strategies of either pure remanufacturing or pure production are more economical than a mixed strategy (one that combines both strategies). A mathematical model is developed that accounts for the inventories of subassemblies. The results suggested that not accounting for the disassembled components of a product leads to inappropriate inventory decisions that are not environmentally sound.     

Optimal policies in hybrid manufacturing/remanufacturing systems with product substitution

In hybrid control systems for simultaneous remanufacturing of used products and manufacturing of new ones, the two operations are not directly interconnected if remanufactured items are downgraded and have to be sold in markets different from those for new products. Sometimes a connection between these markets is given by a downward substitution property which allows the producer to offer a new item instead of a remanufactured one in case of a shortage of a remanufactured product. Thus, shortage costs can be avoided, but a loss in profit due to sale of a high-graded product at the price of a low-graded one has to be accepted. For a single-period problem with stochastic returns of used products and stochastic demands of serviceable ones, it is shown how the manufacturing and remanufacturing decisions have been coordinated in order to maximize the total expected profit. It turns out that under strictly proportional costs and revenues a medium-simple ‘order-up-to policy’ with two parameters and two parameter functions is optimal. However, optimal policies in situations where manufacturing leadtimes exceed leadtimes for remanufacturing turn out to be different from those in the opposite leadtime case. The research presented combines methods for policy analysis in stochastic manufacturing/remanufacturing problems and in stochastic inventory control problems with substitutable products.     

Optimal control of a one product recovery system with leadtimes

In this paper a recovery system for a single product is investigated. Besides a remanufacturing and a manufacturing facility the system consists of one inventory for returned and recoverable items and one for serviceable items. Demands are satisfied from serviceable inventory, which can be replenished by remanufactured returned items, which are as good as new, or by new produced items. Additionally, there is the possibility of disposing of returned items.We determine the cost optimal manufacturing, remanufacturing and disposal rates for the system under the assumptions of a linear cost structure, a finite planning horizon and deterministic and dynamic demand and return rates. Thereby we study two classes of policies, one where backorders are forbidden and another one where they are allowed. In contrast to the existing literature positive leadtimes are considered.     

Robust optimal policies of production and inventory with uncertain returns and demand

We consider an inventory and production planning problem with uncertain demand and returns, in which the product return process is integrated into the manufacturing process over a finite planning horizon. We first propose an inventory control model for the return and remanufacturing processes with consideration of the uncertainty of the demand and returns. Then a robust optimization approach is applied to deal with the uncertainty of the problem through formulating a robust linear programming model. Moreover, properties on the robust optimization model are studied, and an equivalent robust optimization model based on duality theory is obtained which allows the solutions to be derived more efficiently. Finally, we provide a set of numerical examples to verify the effectiveness of the approach and analyze the effects of the key parameters on the solutions.     

Remanufacturing decision and sustainability under product life cycle uncertainty

Abstract

For a single type of product, we study a firm's remanufacturing decisions for the product under demand uncertainty from a real options approach. Specifically, we assume that the product life cycle consists of a growth regime with the expected product demand and volatility increasing with respect to time and a decay regime with the expected product demand and volatility decreasing with respect to time while the timing of regime change itself is uncertain as well. Under this framework, this study aims to derive and analyze the demand threshold above which the firm establishes a remanufacturing process in its production system. Moreover, the number of products being remanufactured throughout the life cycle is numerically studied to assess the degree of sustainability due to remanufacturing.     

A new lot-sizing heuristic for manufacturing systems with product recovery

We consider a deterministic model of the manufacturing system with product recovery. Two types of policies for the problem had been proposed in literature, namely the (1,R) policy, in which one manufacturing setup is followed by R remanufacturing setups and the (P,1) policy, which has P manufacturing setups, following every remanufacturing setup. Teunter (2004) developed heuristics to evaluate the cost for both policies and recommended choosing the better one among them. In this paper, we develop a new class of general (P,R) policies, where the long-run ratio of the number of manufacturing setups to the number of remanufacturing setups is P/R. Rather than have P manufacturing setups followed by R remanufacturing setups, we interleave (or intersperse) the setups of the manufacturing lots and the remanufacturing lots in such a way that the buildup of the recoverable inventory is minimized. We develop interleaving based (P,R) policy heuristics for the problem. Numerical results presented in the paper show that the proposed heuristic outperforms or performs as well as the best of the Teunter (2004) policies for all the problems tested.     

Optimal production–inventory strategies for a HMMS-type reverse logistics system

The aim of the paper is to find optimal inventory policies in a reverse logistics system with special structure. It is assumed that demand is a known continuous function in a given planning horizon and return rate of used items is a given function. There is a constant delay between the using and return process. We investigate two stores. The demand is satisfied from the first store, where the manufactured and remanufactured items are stored. The returned products are collected in the second store and then remanufactured or disposed. The costs of this system consist of the quadratic holding costs for these two stores and the quadratic manufacturing, remanufacturing and disposal costs.The model is represented as an optimal control problem with two state variables (inventory status in the first and second store) and with three control variables (rate of manufacturing, remanufacturing and disposal). The objective is to minimize the sum of the quadratic deviation from described inventory levels in stores and from described manufacturing, remanufacturing and disposal rates. In this form, the model can be considered as a generalization of the well-known Holt et al. (Planning Production, Inventories, and Work Forces, Prentice-Hall, Englewood Cliffs, NJ, 1960) model with two warehouses. After solving the problem, we give some numerical examples to represent the optimal path in dependence of the demand rates.     

A production rate control policy for stochastic repair and remanufacturing systems

We consider the control of a manufacturing system responding to planned demand at the end of the expected life of each individual piece of equipment and unplanned demand triggered by a major equipment failure. The difficulty of controlling this type of production system resides in the variable nature of the remanufacturing process. In practice, remanufacturing operations for planned demand can be executed at different rates, referring to different component replacement and repair strategies. We formulate this problem as a multi-level control problem and propose a suboptimal control policy. The proposed control policy is described by inventory thresholds triggering the use of different execution modes. Determination of the control policy parameters is based on parameter optimization of analytical cost expressions. A numerical example based on a real case is presented. Our analysis demonstrates that the use of the proposed control approach can lead to a significant reduction in the total average cost, as compared to current practices.     

浅谈炼化企业如何开展生产经营优化工作

炼化企业生产经营优化的特点是炼化一体化优化,将炼油和化工业务作为一个整体,统筹进行资源配置.构建炼化一体化生产经营优化机制是一项复杂的系统工程,需要建立起相应的组织机制、运行机制、评估和考核机制,并依靠科学的管理理念、成熟的管理手段和先进的工具软件,对供应、生产、销售、运输等各环节进行全面优化.优化工作的重点是资源配置优化、产品结构优化、原料和产品库存优化、检修时间优化.文章以某国家大型炼化企业为例,详细介绍了炼化企业如何开展生产经营优化工作.     

Optimal inventory and pricing policies for remanufacturable leased products

In this paper we consider a company which leases new products and also sells remanufactured versions of the new product that become available at the end of their lease periods. When the amount of end-of-lease items in stock is not sufficient to meet the demand for remanufactured products, the firm may purchase additional cores from a third-party supplier. We develop a dynamic programming formulation for determining the optimal price of remanufactured products, and optimal payment structure for the leased products. Our objective is to maximize the discounted system-wide profit over a finite horizon. The profit function consists of revenues that are obtained from remanufactured product sales and leasing, remanufacturing and manufacturing costs, inventory holding and shortage costs. We consider a consumer choice based demand model for mapping a potential customer into one of the product segments (a remanufactured product customer or a customer for a leased product with a particular lease period) for a given price/lease payment vector. We explore several properties of the discounted profit function and provide insight on the behavior of pricing and inventory policies. We also investigate the effect of key product characteristics such as deterioration in age, cost of shortage in remanufacturable product inventory, and key market characteristics such as relative willingness-to-pay for buying a remanufactured product and relative willingness-to-pay for leasing a new product on optimal pricing policies through a computational study.     

考虑可持续性设计的闭环供应链差异定价研究

为了解决回收产品再制造成本增加甚至难以进行再制造的难题,制造商在产品生产的前期就要考虑后期再制造活动的可实施性,即考虑可持续性设计。在考虑可持续性设计情况下,本文针对由一个制造商和一个经销商构成的两级闭环供应链系统,分别建立经销商从事再制造和制造商从事再制造两种模式下的差异定价模型,得到了相应的最优定价策略,并主要针对可持续性努力程度,讨论其与各个最优决策变量、产品单位成本及可持续性努力程度系数之间的关系。研究给出了可持续性努力程度分别对新产品和再制造产品的最优中间价、最优销售价、最优销售量及最优利润的影响,同时论证了新产品和再制造产品的单位成本及其可持续性努力程度系数分别对可持续性努力程度的影响,并对经销商从事再制造和零售商从事再制造两种模式进行了对比分析。     

The bullwhip effect in capacitated supply chains with consideration for product life-cycle aspects

This paper presents an analysis of the bullwhip effect and net-stock amplification in a three-echelon supply chain considering step-changes in the production rates during a product's life-cycle demand. The analysis is focused around highly complex and engineered products (e.g., automobiles), that have relatively long production life-cycles and require significant capital investment in manufacturing. Using a simulation approach, we analyze three stages of the product life-cycle including low volumes during product introduction, peak demand, and eventual decline toward the end of the life-cycle. Parts of the simulation model have been adopted by a major North-American automotive OEM as part of a scenario analysis tool for strategic supply network design and analysis. The simulation results show that performance of a system as a whole deteriorates when there is a step-change in the life-cycle demand. While restriction in production capacity does not significantly impact the bullwhip effect, it increases the net stock amplification significantly for the supply chain setting under consideration. Furthermore, a number of important managerial insights are presented based on sensitivity analysis of interaction effect of capacity constraints with other supply chain parameters.     

A hybrid simulation optimization method for production planning of dedicated remanufacturing

This paper presents a hybrid cell evaluated genetic algorithm (CEGA) for optimization of the dedicated remanufacturing system with simulation. The paper first summarizes the special characteristics and problems of the dedicated remanufacturing. The paper then proposes a simulation model with a prioritized stochastic batch arrival mechanism, considering factors that affect the total profit. Based on the simulation model, the CEGA algorithm is developed to optimize the production planning and control policies for dedicated remanufacturing. A case study is provided based on the remanufacturing facility located at Austin, USA     

Dynamic lot sizing problem with continuous-time Markovian production cost

This paper develops a polynomial algorithm for obtaining dynamic economic lot sizes in a single product multiperiod production system with the objective of minimizing total production and inventory costs over T periods. It is assumed that production costs are linear, inventory costs are concave, setup costs are zero and backlogging is not permitted in all periods. Moreover, the unit production cost is a stochastic variable, which is evolved according to a continuous-time Markov process over the planning horizon. The model is formulated as a stochastic dynamic programming (DP) optimization with the state variable being unit production cost. Then, it is solved using the backward dynamic programming approach. To justify the application of the proposed model, two practical cases are presented.     

Model and analysis of integrated production–inventory system: The case of steel production

The study originated from an industrial case study in the field of steel production, but it presents a larger interest, as many other manufacturing fields have similar concerns (e.g. foundries, food, textile and paper industries). A significant phase of steel manufacturing is the product cooling (likewise, drying in paper and textile production, or maturing in food production). This phase may be completed in different ways, but (1) it must be carried out in the finished product warehouse and (2) it must meet both production optimisation and customer needs. The latter requirement acquires a strategic relevance in JIT environments. The present study proposes a mathematical model to find the optimal production schedule of steel billets, based on the relevant parameters of the productive system (set-up and processing times, demand profile). In the industrial case examined, the negative impact of holding costs on cash flows is also linked to the space required by the cooling process, which depends on the production schedule adopted. In other words, the finished product storage can be considered a part of the manufacturing cycle and impacts on it. In the case of steel plants operating in JIT environments, the warehouse must be promptly emptied and carefully managed to exploit the available space. Thus, the effect of inventory costs is examined in a production–inventory system with finite capacity, where products are made to order and share the same manufacturing facility. The study is completed by an experimental analysis to investigate the effect of variations in the relevant parameters of the problem.     

Assessing the Economic Rationality of Remanufacturing Products*

Consideration is given to the factors that affect the determination of the profitability of remanufacturing product. This results in a technique being developed and applied to assess the economic rationality of remanufacturing a variety of products. A study of price preferences from 49 subjects finds that in many cases an original equipment manufacturer (OEM) will earn greater overall profits by offering both new and remanufactured versions of their product. Differences in pricing behavior are noted between both products and individuals. There also appears to be differences in switching behavior. It is, however, reasonable to treat the transfer in preference from new product to remanufactured product as linear over some price range. This assumption allows for a relatively simple calculation of under what circumstances it is economically rational for an OEM to produce both new and remanufactured products and in such situations what the relative prices, sales, and profits should result. The remanufactured products considered are retreaded tires, auto parts, cell phones, toner cartridges, printers/copiers, and disposable cameras. In addition to the article's academic contributions, techniques and insights are offered for practitioners to assist them in understanding the opportunities and implication of pursuing remanufacturing as an addition to their current products.