The Value of Information in Reverse Logistics

Michael Ketzenberg, Erwin van der Laan and Ruud Teunter

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: We explore the value of information in the context of a remanufacturer that faces uncertainty with respect to demand, product return, and product recovery (yield loss). We assume a single period model in which the operational decision of interest is the quantity of new product to order. Our objective is to evaluate the absolute and relative value of the different types of information that such a firm may choose to invest in order to reduce the uncertainty it experiences in matching supply with demand. The different types of information include demand, return, and yield loss. Our results are extensive and reveal that the value for any specific type of information depends both on the overall level of uncertainty and the level of uncertainty that is attributed to the information for which it explains. We develop and test a theoretical model that is predictive of 1) the value of each type of information, 2) the conditions that give rise to the value for each type of information, and 3) the relative value for each type of information.

Keywords: inventory control; newsvendor problem; remanufacturing; value of information (search for similar items in EconPapers)
JEL-codes: C53 M M11 R4 (search for similar items in EconPapers)
Date: 2004-08-06
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Citations: View citations in EconPapers (2)

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