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Returnable packaging management in automotive parts logistics: Dedicated mode and shared mode

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  • Zhang, Qinhong
  • Segerstedt, Anders
  • Tsao, Yu-Chung
  • Liu, Biyu

Abstract

We compare two different modes, i.e., dedicated mode and shared mode, used in packaging management in automotive parts logistics. In dedicated mode, every parts supplier uses his own packaging; while in shared mode, packages can be shared among the suppliers. For each mode, we calculate the total costs consisting of transportation cost and inventory holding cost, and prove that the total costs, the transportation cost and the inventory holding cost are all smaller under shared mode. We further illustrate the factors that influence the cost savings of shared mode, i.e., the total cost of dedicated mode minus that of shared mode. In particular, the cost savings are proved to be negatively related to the number of package categories, and are positively related to: (1) the demand gap of packages between areas, i.e., sum of the volume difference of every kind of packages that transported in and out of one area; (2) the failed ratio factor of the returned packages, i.e., the ratio of the packages that cannot be returned to the supplier because of broken, pilferage, misplace, etc.; and (3) the time savings of short distance transportation, i.e., the transportation time consumed between areas minus the transportation time within one area. Finally, numerical examples show that the cost savings can be considerable, and the number of package categories is the most important influence factor.

Suggested Citation

  • Zhang, Qinhong & Segerstedt, Anders & Tsao, Yu-Chung & Liu, Biyu, 2015. "Returnable packaging management in automotive parts logistics: Dedicated mode and shared mode," International Journal of Production Economics, Elsevier, vol. 168(C), pages 234-244.
    • Handle: RePEc:eee:proeco:v:168:y:2015:i:c:p:234-244
    DOI: 10.1016/j.ijpe.2015.07.002
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    References listed on IDEAS

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    5. Liu, Guoquan & Li, Lei & Chen, Jianghang & Ma, Fei, 2020. "Inventory sharing strategy and optimization for reusable transport items," International Journal of Production Economics, Elsevier, vol. 228(C).
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    9. Byungsoo Na & Min Kyu Sim & Won Ju Lee, 2019. "An Optimal Purchase Decision of Reusable Packaging in the Automotive Industry," Sustainability, MDPI, vol. 11(23), pages 1-13, November.

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