Optimal inventory control policy of a hybrid manufacturing – remanufacturing system using a hybrid simulation optimisation algorithm

Abstract

Remanufacturing is the process of bringing used products back to like-new products. In this study, inventory control policies in remanufacturing with different prioritisations (remanufacturing vs. manufacturing) and coordination (non-coordinating vs. coordinating) are investigated. A proposed hybrid simulation optimisation algorithm, where outputs are exchanging between Mixed-Integer Linear Programming and simulation models, is presented to search for optimality. Obtained results are then compared with the results obtained from the pure analytical model and simulation-based optimisation where the proposed Hybrid Algorithm outperforms other solving methods by obtaining a statistically higher profit, using less number of iterations to find the optimal result. Regarding the inventory control policy, it is found that the returned component ratio (proportion of returned components as compared to the actual customer demand) has an effect on the inventory control policy. The outcome of the study can recommend the best operating solution at each level of the returned component ratios under an uncertain environment.

Keywords:

• Inventory control
• remanufacturing
• hybrid manufacturing/remanufacturing system
• hybrid simulation optimisation algorithm
• returned component ratio