An Inventory Model with Dependent Product Demands and Returns

Erwin van der Laan and G.P. Kiesmueller

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: In this paper an inventory model for a single reusable product is investigated, in which the random returns depend explicitly on the demand stream. Further, the model distinguishes itself from most other research in this field by considering leadtimes and a finite planning horizon. We show that neglecting the dependency between demands and returns of products may lead to bad performance with respect to total average relevant costs. Additionally, our results enable us to determine the minimal recovery probability or the minimal length of the planning horizon for which reuse is profitable.

Keywords: Markov Chain; order-up-to policy; remanufacturing; reusable products (search for similar items in EconPapers)
JEL-codes: M M11 R4 (search for similar items in EconPapers)
Date: 2001-03-27
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Citations: View citations in EconPapers (31)

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Journal Article: An inventory model with dependent product demands and returns (2001)
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