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Technical Note---Optimal Control Policy for Capacitated Inventory Systems with Remanufacturing

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  • Xiting Gong

    (Department of Systems Engineering and Engineering Management, The Chinese University of Hong Kong, Shatin, N.T., Hong Kong)

  • Xiuli Chao

    (Department of Industrial and Operations Engineering, University of Michigan, Ann Arbor, Michigan 48109)

Abstract

This paper studies the optimal control policy for capacitated periodic-review inventory systems with remanufacturing. The serviceable products can be either manufactured from raw materials or remanufactured from returned products; but the system has finite capacities in manufacturing, remanufacturing, and/or total manufacturing/remanufacturing operations in each period. Using L -natural convexity and lattice analysis, we show that, for systems with a remanufacturing capacity and a manufacturing/total capacity, the optimal remanufacturing policy is a modified remanufacture-down-to policy and the optimal manufacturing policy is a modified total-up-to policy. Our study reveals that the optimal policies always give production priority to remanufacturing for systems with a remanufacturing capacity and/or a total capacity; but this priority fails to hold for systems with a manufacturing capacity.

Suggested Citation

  • Xiting Gong & Xiuli Chao, 2013. "Technical Note---Optimal Control Policy for Capacitated Inventory Systems with Remanufacturing," Operations Research, INFORMS, vol. 61(3), pages 603-611, June.
    • Handle: RePEc:inm:oropre:v:61:y:2013:i:3:p:603-611
    DOI: 10.1287/opre.2013.1168
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    References listed on IDEAS

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    2. Anyan Qi & Hyun-Soo Ahn & Amitabh Sinha, 2017. "Capacity Investment with Demand Learning," Operations Research, INFORMS, vol. 65(1), pages 145-164, February.
    3. Mabel C. Chou & Chee-Khian Sim & Xue-Ming Yuan, 2020. "Policies for inventory models with product returns forecast from past demands and past sales," Annals of Operations Research, Springer, vol. 288(1), pages 137-180, May.
    4. Yuqian Xu & Lingjiong Zhu & Michael Pinedo, 2020. "Operational Risk Management: A Stochastic Control Framework with Preventive and Corrective Controls," Operations Research, INFORMS, vol. 68(6), pages 1804-1825, November.
    5. Qing Li & Peiwen Yu, 2014. "Multimodularity and Its Applications in Three Stochastic Dynamic Inventory Problems," Manufacturing & Service Operations Management, INFORMS, vol. 16(3), pages 455-463, July.
    6. Youyi Feng & Jianjun Xu & Shaohui Zheng, 2019. "Technical Note—Dynamic Optimal Policy for an Inventory System of Two Substitutable Products with Positive Replenishment Lead Times," Operations Research, INFORMS, vol. 67(4), pages 1027-1034, July.
    7. Liao, Haolan & Zhang, Qingyu & Li, Lu, 2023. "Optimal procurement strategy for multi-echelon remanufacturing systems under quality uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    8. Zhijie Tao & Sean X. Zhou, 2014. "Approximation Balancing Policies for Inventory Systems with Remanufacturing," Mathematics of Operations Research, INFORMS, vol. 39(4), pages 1179-1197, November.
    9. Han Zhu, 2022. "A simple heuristic policy for stochastic inventory systems with both minimum and maximum order quantity requirements," Annals of Operations Research, Springer, vol. 309(1), pages 347-363, February.
    10. Xin Chen & Menglong Li, 2021. "Discrete Convex Analysis and Its Applications in Operations: A Survey," Production and Operations Management, Production and Operations Management Society, vol. 30(6), pages 1904-1926, June.
    11. Tianxiao Chen & Xiting Gong & Qing Li & He Xu, 2021. "Multiseason production planning under export quotas," Naval Research Logistics (NRL), John Wiley & Sons, vol. 68(3), pages 279-294, April.
    12. Anyan Qi & Hyun-Soo Ahn & Amitabh Sinha, 2017. "Capacity Investment with Demand Learning," Operations Research, INFORMS, vol. 65(1), pages 145-164, February.
    13. Xin Chen & Peng Hu & Simai He, 2013. "Technical Note---Preservation of Supermodularity in Parametric Optimization Problems with Nonlattice Structures," Operations Research, INFORMS, vol. 61(5), pages 1166-1173, October.
    14. Ze-Bin Wang & Yao-Yu Wang & Jian-Cai Wang, 2016. "Optimal distribution channel strategy for new and remanufactured products," Electronic Commerce Research, Springer, vol. 16(2), pages 269-295, June.

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