Optimal Circular Economy and Process Maintenance Strategies for an Imperfect Production–Inventory Model with Scrap Returns

Rung-Hung Su, Ming-Wei Weng (), Chih-Te Yang () and Chia-Hsuan Hsu
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Rung-Hung Su: Department of Statistics and Information Science, Fu Jen Catholic University, New Taipei City 242062, Taiwan
Ming-Wei Weng: Department of Marketing and Logistics Management, Chaoyang University of Technology, Taichung 413310, Taiwan
Chih-Te Yang: Department of Business Administration, Tamkang University, New Taipei City 251301, Taiwan
Chia-Hsuan Hsu: Department of Statistics and Information Science, Fu Jen Catholic University, New Taipei City 242062, Taiwan

Mathematics, 2023, vol. 11, issue 14, 1-16

Abstract: To protect our environment, current firms are committed to the circular economy and process maintenance strategies to reduce the waste of resources. In this way, they can also save costs and create an enterprise image and value. Therefore, this study explores an imperfect production system with a circular economy and process maintenance activities, wherein the defective products can be converted into scrap returns (i.e., secondary raw materials) and products can be manufactured using mixed materials containing scrap returns. The proposed system considers multiple products with varying feed rates of scrap returns. According to the scenario of the aforementioned production system, this paper develops a production–inventory model aimed at cost minimization, in which the production run time, purchased quantity of material, number of maintenance times, and recovery rate are decision variables. Furthermore, we also develop a computational algorithm to obtain these optimal solutions efficiently. Finally, the numerical and sensitivity analyses based on a practical case are presented to illustrate the applicability of our method and some managerial implications. For example, both strategies efficiently reduce the total cost per unit time in the proposed numerical example. The sensitivity results can be used to determine the optimal combination of two strategies and the execution moment under various changes in cost parameters.

Keywords: inventory; circular economy; imperfect processes; maintenance; scrap returns (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2023
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