Optimal ordering and production policy for a recoverable item inventory system with learning effect

Abstract

This article presents two models for determining an optimal integrated economic order quantity and economic production quantity policy in a recoverable manufacturing environment. The models assume that the unit production time of the recovery process decreases with the increase in total units produced as a result of learning. A fixed proportion of used products are collected from customers and then recovered for reuse. The recovered products are assumed to be in good condition and acceptable to customers. Constant demand can be satisfied by utilising both newly purchased products and recovered products. The aim of this article is to show how to minimise total inventory-related cost. The total cost functions of the two models are derived and two simple search procedures are proposed to determine optimal policy parameters. Numerical examples are provided to illustrate the proposed models. In addition, sensitivity analyses have also been performed and are discussed.

Keywords:

• recovery
• reverse logistics
• inventory
• recycling
• EOQ
• EPQ

Acknowledgements

The author would thank the anonymous referees for their constructive comments and helpful suggestions. He also acknowledges the support of the National Science Council of the Republic of China under Contract no. NSC 98-2221-E-020-021.

Notes

1. If costs did not influence a decision, we referred to them as irrelevant costs.