Analysis of an inventory control policy in a (1:1:N) SCM model with remanufacturing and disposal allowed

Abstract

This thesis considers an integrated (1:1:N) remanufacturer-warehouse-retailers inventory system under supply chain environment for a remanufacturable item following a Poisson process of returning from its usage where disposal at the remanufacturing facility is allowed, and customers demand for serviceable units arrives at the retailer level only. Demands at the retailers and returns at the remanufacturing facility arrive in independent stationary Poisson processes. It is assumed that return rate is less than demand rate so that procurement is required at certain times from outside supplier. Returned units are either remanufactured or disposed directly, which is decided based on with only the number of returned units at the remanufacturable inventory storage. For the system, continuous review inventory models are considered, including the (s, Q) ordering policy at the warehouse and the base-stock (S-1, S) policy at each retailer. Moreover, the procurement leadtime is assumed to be constant and any unsatisfied demands at the retailers are considered as backordered. The objective of the integrated model is to find an optimal inventory policy that minimizes the total expected average cost of the whole system where the purchasing cost from the outside procurement, the inventory holding cost at the warehouse and all the retailers, the backorder cost at all the retailers, the disposal cost, and the remanufacturing cost are incorporated. This model is applied to leased/ rented product management as being often found in telephone, computer, projector and copying machine industries. In the problem analysis, Markov Chain theory and Queueing theory are applied to derive the mathematical formulation of the associated objective for which some approximations are made to derive the probability distributions concerned with backorder (for the warehouse and retailers). This formulation is then used to determine the associated best inventory decisions, for which an iterative heuri...