Optimal acquisition decision in a remanufacturing system with partial random yield information

Cheng-Hu Yang, Xin Ma and Srinivas Talluri

International Journal of Production Research, 2019, vol. 57, issue 6, 1624-1644

Abstract: When making decisions to acquire used products or components (cores), a remanufacturer faces limited information on the quality or proportional yield of cores during the recovery process. In this paper, we propose and analyse a robust optimisation model for studying the remanufacturing decision problem with partial random yield information, that is, when the quality information of cores is partly unknown in a remanufacturing system. Regarding the impacts of unknown yield information, we only require the support and mean of the proportional yield rather than the true distributions. The closed-form solutions of acquisition quantities are derived based on the minimax regret approach. In addition, to validate the effectiveness of the analytical results, particularly the acquisition of yield information, numerical experiments are designed and implemented using (1) the support and mean of the proportional yield based on the manufacturer’s knowledge and (2) a sampling inspection to evaluate the performance of the robust optimisation approach, the benchmark, and the naïve approach. We observe that the minimax regret approach slightly underperforms compared to the benchmark but performs much better than the naïve approach. As an acceptable choice, this approach is less complicated and extremely easy to implement to meet the needs of practical situations based on its robust closed-form solutions.

Date: 2019
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Citations: View citations in EconPapers (2)

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DOI: 10.1080/00207543.2018.1494393

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