Determining core acquisition quantities when products have long return lags

Abstract

An important problem faced in closed-loop supply chains is ensuring a sufficient supply of reusable products (i.e., cores) to support reuse activities. Accurate forecasting of used product returns can assist in effectively managing the sourcing activities for cores. The application of existing forecasting models to actual data provided by an Original Equipment Manufacturer (OEM) remanufacturer resulted in the following challenges: (i) inherent difficulties in estimation due to long return lags in the data and (ii) required adjustments for initial conditions. This article develops methods to address these issues and illustrates the proposed approach using the data provided by the OEM remanufacturer. The cost implications of using the proposed method to source cores are also investigated. Results of the performed analysis showed that the proposed forecasting approach performed best when the product is in the maturity or decline stages of its life cycle, with the rate of product returns balanced with the demand volume for the remanufactured product. Forecasting product returns can therefore be best leveraged for reducing the acquisition costs of cores in such settings.

Keywords:

• Distributed lag model
• forecasting
• closed-loop supply chains

Additional information

Notes on contributors

Toyin Clottey

Toyin Clottey holds a Ph.D. in Operations Management and an M.S. in Statistics from The Ohio State University. His primary research interests are in closed-loop supply chains, sustainable operations, and survey research methods. His work has appeared in Decision Sciences and Journal of Service Science. He is a member of the Decision Sciences Institute, INFORMS, and the Production and Operations Management Society.

W.C. Benton

W.C. Benton, Jr., is the Edwin D. Dodd Professor of Management Sciences in the Max M. Fisher College of Business at The Ohio State University where he teaches courses in healthcare delivery, operations management, purchasing, and supply chain management to undergraduates, MBAs, and doctoral candidates. He has published numerous articles in the fields of healthcare, supply chain management, and sustainability. His publications have appeared in IIE Transactions, New England Journal of Medicine, Naval Research Logistics, Decision Science, Journal of Operations Management, and others. He received his doctorate in both Operations and Systems Management and Quantitative Business Analysis from Indiana University, Bloomington, Indiana. He serves on the Board of Directors for the Healthcare Accreditation Colloquium, Inc., Academic Council for Healthcare Supply Chain Research, The Sleep Medicine Foundation, The House of Hope, and The Supply Chain Research Group and is a member of the Decision Sciences Institute, the Institute of Management Sciences, The Operations Management Association, The Mathematical Association of America, and others.