Admission control of product returns
Résumé
A production-inventory system with stochastic product returns is considered. Returns can be either remanufactured or disposed. If a returned product is remanufactured, it can be sold as a new product. A satisfied demand yields a revenue corresponding to the price of the product. The cost structure consists of production costs, inventory holding costs, costs for accepting a return and costs for rejecting a return. The optimal policy is characterized (production and admission of product returns) maximizing the discounted expected prot. We show that the optimal policy is an (R, S) policy such that it is optimal to produce if and only if the stock level is below S and to accept product returns if and only if the stock level is below R.