Inventory decision-making models for a closed-loop supply chain system

Abstract

A closed-loop supply chain system is investigated. This system consists of a retailer, a manufacturer, a supplier, and a collector. The demand of the retailer is satisfied either by newly manufactured products or by remanufactured products which are comparable to the new ones in function and quality. We apply one manufacturing cycle and at least one remanufacturing cycle policy and at least one manufacturing cycle and one remanufacturing cycle policy to the manufacturer's manufacturing and remanufacturing operations, and give the corresponding procedures to determine the optimal system policy in the completely decentralised decision-making case and the completely centralised decision-making case by elimination theory and the difference function. A numerical comparison of our results with those of Chung et al. (2008. Optimal policy for a closed-loop supply chain inventory system with remanufacturing. Mathematical and Computer Modelling, 48 (5–6), 867–881) is also performed. The results are general since the manufacturer tends to adopt one manufacturing cycle and at least one remanufacturing cycle policy when the return rate is higher; otherwise, the manufacturer tends to adopt at least one manufacturing cycle and one remanufacturing cycle policy.

Keywords:

• inventory management
• closed-loop supply chain
• remanufacturing
• manufacturing

Acknowledgements

Kaifu Yuan would like to thank two anonymous reviewers for their valuable comments and suggestions which have greatly improved the content and exposition of the paper, Dr Konstantaras Ioannis of the University of Ioannina for his helpful advice on refining the manuscript and Dr He Bo of Choingqing University for his help. In addition, this research is partially supported by the Doctoral Research Fund, Guizhou college of Finance and Economics on 2007–2009.