Optimal policy for a closed-loop supply chain inventory system with remanufacturing

Authors:
Shen-Lian Chung;Hui-Ming Wee;Po-Chung Yang
Affiliations:
Department of Information Management, St. John's University, Tamsui, Taipei 25135, Taiwan;Department of Industrial Engineering, Chung Yuan Christian University, Chungli 32023 Taoyuan, Taiwan;Industrial Engineering and Management Department, St. John's University, Tamsui, Taipei 25135, Taiwan
Venue:
Mathematical and Computer Modelling: An International Journal
Year:
2008

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Abstract

Previous researchers have developed ways of managing forward-oriented supply chains, and gave insight to solve single-stage inventory systems. In this study, we analyze an inventory system with traditional forward-oriented material flow as well as a reverse material flow supply chain. In the reverse material flow, the used products are returned, remanufactured and shipped to the retailer for resale. A multi-echelon inventory system with remanufacturing capability is proposed. We then develop a closed-loop supply chain inventory model and maximize the joint profits of the supplier, the manufacturer, the third-party recycle dealer and the retailer under contractual design. The analytical results of this study show a significant increase in the joint profit when the integrated policy is adopted.