Remanufacturing lotsizing with stochastic lead-time resulting from stochastic quality of returns

Abstract

In the current paper, we model the duration of recovery of used products as a variable that depends on each unit’s quality. Because of the uncertainty related to returned units’ quality, the necessary time for the recovery of a lot is a random variable. We provide analytical expressions for the optimisation of recovery planning decisions under different assumptions regarding quality and demand characteristics. In addition, through an extensive numerical study, we examine the impact of the different parameters on the necessity to consider explicitly the stochastic nature of recovery lead-time. Moreover, we discuss the advisability of establishing procedures for the classification of returns according to their quality condition. As our findings indicate, overlooking quality uncertainty can increase related costs considerably because of poor process coordination. Furthermore, ignoring variability may result in undue overestimation of the efficiency of lot-sizing policies. On the other hand, the establishment of quality assessment procedures is worthwhile only when the stochastic behaviour of quality cannot be taken into account explicitly.

Keywords:

• reverse logistics
• stochastic lead-time
• inventory management
• stochastic demand and returns’ quality

Additional information

Funding

This research has been co-financed by the European Union (European Social Fund – ESF) and Greek national funds through the Operational Program “Education and Lifelong Learning” of the National Strategic Reference Framework (NSRF) – Research Funding Program: Thales. Investing in knowledge society through the European Social Fund.