Dynamic Product Acquisition in Closed Loop Supply Chains

Stefan Minner (1) , G P Kiesmuller (2)

1 Department of Business Administration
2 School of industrial Engineering [Eindhoven]

We consider a closed loop supply chain where demands can either be satis¯ed from manufacturing new products or by buying back used products from cus- tomers and upgrading their functionality by remanufacturing. A joint buy-back pricing and manufacturing-remanufacturing decision model at the operations- marketing interface model is presented that allows for dynamic parameters, e.g., product life cycles and seasonal aspects. The model allows to identify bene¯cial opportunities for buying back and storing used products for imme- diate and future recovery.We present a new deterministic, dynamic, continuous time optimization model, derive necessary and su±cient optimality conditions, and develop a solution algorithm to ¯nd the cost minimizing manufacturing and remanufacturing policies as well as buy back strategies for used prod- ucts based on Pontryagin's Maximum Principle. It is shown that an optimal policy, in general, will include time intervals where returns are acquired as to synchronize demand and remanufacturing, where returns are acquired and stored for future remanufacturing, and intervals where demand is satis¯ed by a mix of manufactured and remanufactured products. Furthermore, we discuss several reactive and proactive acquisition and remanufacturing heuristics and show under which conditions they are optimal. The ¯ndings are illustrated by numerical examples.

Mots clés: Physical Sciences

Domaines: Sciences de l'ingénieur [physics]

Stefan Minner, G P Kiesmuller. Dynamic Product Acquisition in Closed Loop Supply Chains. International Journal of Production Research, 2011, pp.1. ⟨10.1080/00207543.2010.539280⟩. ⟨hal-00708533⟩