Optimal Inventory Policy for Two-echelon Remanufacturing
Abstract
This paper presents a two-echelon remanufacturing facility subject to constant demand in which the disassembly process and the repair process observe stochastic yield. The author develops an intuitive scheduling policy and performs a robustness test. Yano and Lee (1995) revised several lot-sizing models in which production yield was random. Many of those models were inspired by the difficulties faced in the production of electronic components, where the production yield in some stages may be very low. A similar situation occurs in remanufacturing sites. Cores entering the remanufacturing shop enter a pre-selection stage in which some disassembly takes place. The disassembly modules are stocked close to the renovation area, where they are repaired and made ready to reuse. One particularity of the remanufacturing shop is the different ways that the inventory held in stock affects the operating cost, whether it is before or after the final production stage. Most of the holding cost in the upstream operation refers to the physical handling of a large number of assemblies that occupy a significant amount of space, but might not survive the remanufacturing process. Meanwhile, most of the holding cost in the downstream operation refers to the opportunity cost of the resources committed to adding value to the subassembly renovation. The remanufacturing shop that is described here has not yet been modeled. This paper contributes to the literature by providing a simple policy with two control variables: the lot size in the upstream operation, and the echelon multiple used to identify the lot size in the renovation station. Moreover, it identifies the conditions under which the remanufacturing shop will not hold inventory between the two processes, thus renovating all cores immediately after disassembly. The author assumes that demand is constant, and the lead time of both processes is zero. He develops the optimal nested policy and performs numerical tests.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 30, 2007
- Accession Number
- ADA493586
Entities
People
- Geraldo Ferrer
Organizations
- Naval Postgraduate School