Evaluating strategic remanufacturing supply chain decisions

Abstract

Accurately evaluating strategic commitments to remanufacturing requires a comprehensive understanding and consideration of the simultaneous effect of uncertainty on supply and demand. This paper presents a model that supports improved remanufacturing decision-making under stochastic demand and supply components and various cost factor considerations. The model is formulated as a newsvendor model extension that considers the simultaneous effects of probabilistic supply and demand. This characterisation assesses the effects of critical operational constraints on several strategic performance measures including cost, revenue and profit. The paper employs a Monte Carlo approach to assess the performance and extent of engagement in strategic remanufacturing supply chain operations, and illustrates results via a case study application. Results indicate that the technique can assist decision-makers in strategically determining the potential of future engagements in remanufacturing activities, and extends research findings by theoretically examining strategic decision-making for remanufacturing activity.

Keywords:

• remanufacturing
• Monte Carlo method
• simulation
• supply chain design
• sustainable manufacturing
• green manufacturing
• strategy