The impact of product returns and remanufacturing uncertainties on the dynamic performance of a multi-echelon closed-loop supply chain

Li Zhou, Mohamed M. Naim and Stephen M. Disney

International Journal of Production Economics, 2017, vol. 183, issue PB, 487-502

Abstract: We investigate a three-echelon manufacturing and remanufacturing closed-loop supply chain (CLSC) constituting of a retailer, a manufacturer and a supplier. Each echelon, apart from its usual operations in the forward SC (FSC), has its own reverse logistics (RL) operations. We assume that RL information is transparent to the FSC, and the same replenishment policies are used throughout the supply chain. We focus on the impact on dynamic performance of uncertainties in the return yield, RL lead time and the product consumption lead time. Two outcomes are studied: order rate and serviceable inventory. The results suggest that higher return yield improves dynamic performance in terms of overshoot and risk of stock-out with a unit step response as input. However, when the return yield reaches a certain level, the classic bullwhip propagation normally associated with the FSC does not always hold. The longer remanufacturing and product consumption lead times result in a higher overshoot and a longer time to recover inventory, as well as more oscillation in the step response at the upstream echelons. We also study bullwhip and inventory variance when demand is a random variable. Our analysis suggests that higher return yield contributes to reduced bullwhip and inventory variance at the echelon level but for the CLSC as a whole the level of bullwhip may decrease as well as increase as it propagates along the supply chain. The reason for such behaviour is due to the interaction of the various model parameters and should be the subject of further analytical research. Furthermore, by studying the three-echelon CLSC, we produce a general equation for eliminating inventory offsets in an n-echelon CLSC. This is helpful to managers who wish to maintain inventory service levels in multi-echelon CLSCs.

Keywords: Dynamic performance; Bullwhip; Inventory variance; Remanufacturing; Closed-loop supply chain; APIOBPCS (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527316301748
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:183:y:2017:i:pb:p:487-502

DOI: 10.1016/j.ijpe.2016.07.021

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().