Technical Note---Optimal Control Policy for Capacitated Inventory Systems with Remanufacturing

Xiting Gong () and Xiuli Chao ()
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Xiting Gong: Department of Systems Engineering and Engineering Management, The Chinese University of Hong Kong, Shatin, N.T., Hong Kong
Xiuli Chao: Department of Industrial and Operations Engineering, University of Michigan, Ann Arbor, Michigan 48109

Operations Research, 2013, vol. 61, issue 3, 603-611

Abstract: This paper studies the optimal control policy for capacitated periodic-review inventory systems with remanufacturing. The serviceable products can be either manufactured from raw materials or remanufactured from returned products; but the system has finite capacities in manufacturing, remanufacturing, and/or total manufacturing/remanufacturing operations in each period. Using L -natural convexity and lattice analysis, we show that, for systems with a remanufacturing capacity and a manufacturing/total capacity, the optimal remanufacturing policy is a modified remanufacture-down-to policy and the optimal manufacturing policy is a modified total-up-to policy. Our study reveals that the optimal policies always give production priority to remanufacturing for systems with a remanufacturing capacity and/or a total capacity; but this priority fails to hold for systems with a manufacturing capacity.

Keywords: inventory model; product returns; remanufacturing; finite capacity; optimal policy (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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