Joint decision of product configuration and remanufacturing for product family design

Product family design (PFD) is a popular method for increasing product variety to satisfy the needs of diversified markets. With the increasing concern for environmental friendliness in society, more and more companies develop launching remanufactured products and include them in their product families. Therefore, PFD should be considered in a broad decision space where configuration of product variants and remanufacturing are considered simultaneously. However, this issue was not addressed properly in previous research. In this paper, a methodology for joint decision of product configuration and remanufacturing is proposed in which a bi-objective mixed integer programming model is formulated to determine the configurations of both new and remanufactured products for minimising product cost, maximising total market share, and satisfying reliability requirements. Then, Non-dominated Sorting Genetic Algorithm II (NSGAII) is adopted to solve the optimization problem. Computational experiments were conducted and their results show that NSGAII is convergent to the model well. A case study is presented to illustrate the applicability and effectiveness of the proposed methodology.     

Evaluating strategic remanufacturing supply chain decisions

Accurately evaluating strategic commitments to remanufacturing requires a comprehensive understanding and consideration of the simultaneous effect of uncertainty on supply and demand. This paper presents a model that supports improved remanufacturing decision-making under stochastic demand and supply components and various cost factor considerations. The model is formulated as a newsvendor model extension that considers the simultaneous effects of probabilistic supply and demand. This characterisation assesses the effects of critical operational constraints on several strategic performance measures including cost, revenue and profit. The paper employs a Monte Carlo approach to assess the performance and extent of engagement in strategic remanufacturing supply chain operations, and illustrates results via a case study application. Results indicate that the technique can assist decision-makers in strategically determining the potential of future engagements in remanufacturing activities, and extends research findings by theoretically examining strategic decision-making for remanufacturing activity.     

Dual channel closed-loop supply chain coordination with a reward-driven remanufacturing policy

This paper investigates a reward-driven policy, employed in a closed-loop supply chain (CLSC), for acquiring used products earmarked for remanufacture. Under the examined model, a single manufacturer sells products through a retailer as well as directly to end users in a forward supply chain. In the reverse supply chain, three different modes of collection are employed to capture used products for remanufacture: they are through a third party, directly by the manufacturer and from the retailer. Mathematical models for both non-cooperative and centralised scenarios are developed to characterise the pricing decisions and remanufacturing strategies that indicate individual and overall supply chain performance. Optimality of all the proposed models is examined with theory. To coordinate and achieve a win–win outcome for channel members, we proposed a three-way discount mechanism for the manufacturer. Extended numerical investigation provides insights on ways to manage an efficient reward-driven CLSC in a dual-channel environment.     

The boomerang returns? Accounting for the impact of uncertainties on the dynamics of remanufacturing systems

Recent years have witnessed companies abandon traditional open-loop supply chain structures in favour of closed-loop variants, in a bid to mitigate environmental impacts and exploit economic opportunities. Central to the closed-loop paradigm is remanufacturing: the restoration of used products to useful life. While this operational model has huge potential to extend product life-cycles, the collection and recovery processes diminish the effectiveness of existing control mechanisms for open-loop systems. We systematically review the literature in the field of closed-loop supply chain dynamics, which explores the time-varying interactions of material and information flows in the different elements of remanufacturing supply chains. We supplement this with further reviews of what we call the three ‘pillars’ of such systems, i.e. forecasting, collection, and inventory and production control. This provides us with an interdisciplinary lens to investigate how a ‘boomerang’ effect (i.e. sale, consumption, and return processes) impacts on the behaviour of the closed-loop system and to understand how it can be controlled. To facilitate this, we contrast closed-loop supply chain dynamics research to the well-developed research in each pillar; explore how different disciplines have accommodated the supply, process, demand, and control uncertainties; and provide insights for future research on the dynamics of remanufacturing systems.     

Optimal configuration of remanufacturing supply network with return quality decision

This research studies the configuration problem of a remanufacturing production network together with the decision for return quality thresholds, in which, the manufacturer has multiple remanufacturing facilities to satisfy different market demands. Quality of returns is stochastic, while demand for remanufactured products is either stochastic or deterministic. The problem we considered is to determine facilities to operate, minimum quality to accept into each operating facility, return quantity and demand allocation simultaneously so that the system’s profit is maximised. The problem is formulated as a mixed integer non-linear programming model. Through the use of a numerical example, the impact of quantity of returns, total spending, quality uncertainty, demand uncertainty and transportation cost on the remanufacturing system is analysed.     

Dynamic pricing for remanufacturing within socially environmental incentives

We study a dual-product dynamic pricing problem for a remanufacturing system in which a manufacturer makes new and remanufactured products competing for a certain market share. The socially environmental incentives, consisting of consumers' environmentally conscious demand and governments' subsidy on remanufactured products, are considered in this study, which encourage the manufacturer to exert production effort toward environmentally friendly remanufacturing. Three models, namely, two-period, multi-period, and infinite-period scenarios, are formulated to investigate the dynamic pricing problem. Analytical results show that the government's subsidy policies, which provide subsidies to consumers or firms, have equivalent effects for the manufacturer in terms of production and profit. Consumers' environmental consciousness and government subsidy are effective incentives to induce the manufacturer to make more remanufactured products. Some threshold policies are proposed to provide decision supports for manufacturers to formulate pricing and production strategies. By comparing the pricing and production strategies of the three models, we find it interesting that the pricing and production strategies of the multi-period model can be ideally characterised by those of the two-period and infinite-period models. This managerial concept is valuable for manufacturers in formulating pricing and production strategies when the precise production planning horizon is unknown.     

Joint effects of remanufacturing channel design and after-sales service pricing: an analytical study

We conduct an analytical study on remanufacturing channel design and after-sales service pricing, which jointly affect the sustainability and profitability of the supply chain. We model a supply chain with one manufacturer and one independent retailer. The manufacturer, as the Stackelberg game leader, engages in remanufacturing to take advantage of production cost savings. The collection of the used products can be carried out by either the manufacturer or the retailer. After-sales service, for example, extended warranty, is offered with the product and is sold separately. The service provider can be either the manufacturer or the retailer. We use game theoretic models to answer an important research question: How do remanufacturing and after-sales service jointly affect channel selection decisions? We explore the benefits of joint decision making in terms of remanufacturing efficiency and after-sales service performance. We find that it is most efficient for the retailer to collect the used product for remanufacturing and to offer after-sales service, because the retailer simultaneously makes decisions regarding remanufacturing and after-sales service and thus reduces double marginalisation in the supply chain. We also demonstrate numerically how the costs of collecting used products and providing after-sales service impact channel selection decisions.     

Improving the design phase through interorganisational product knowledge models

This paper focuses on the use of interorganisational knowledge models with the purpose of standardising engineer-to-order (ETO) products. Such product variant reductions can lead to decreased costs for both the ETO company and its suppliers without reducing sales. In spite of the attention that supply chain integration has received in the literature, supply chain integration with a focus on the integration of product knowledge in ETO companies and their suppliers has not received much attention. Thus, the purpose of this paper is to define this type of supply chain integration. The concept is investigated by a case study, which supports the claim that supply chain product knowledge integration is an approach for increasing the competitiveness of ETO companies and their suppliers. Given the gap in the literature, the paper may potentially open a new horizon for studying supply chain integration.     

具有产品再制造的闭环供应链动态运作模型

考虑了一类同时具有再分销、再制造和再利用的闭环供应链,并建立了其动态运作模型.供应链由一个制造商和一个供应商组成,废旧产品的回收及对废旧产品的再处理均由制造商完成.采用离散概率分布描述最终产品废旧的可能性,闭环供应链的运作是动态的且满足诸如供应链成员之间协调、各成员运作收益最大等多个目标.设计了一个数值算例验证模型的有效性,并就回收率对闭环供应链的运作性能的影响进行了分析.结果表明,闭环供应链的整体运作性能随着回收率的增大而增加.     

Process plan selection based on product mix and production volume

Most shops currently maintain a single process plan for each part type manufactured by the shop even when multiple process plans are feasible to produce the part. The use of a static process plan for a part regardless of the product mix and volume robs the shop of production flexibility and efficiency. In this paper, given that multiple process plans for a part exist, a method to determine the best process plan to implement for a part type in a given production scenario defined by a known product mix and volume is addressed. The method selects a set of process plans to implement based on minimizing total material handling and machining time for the part mix and volume. The problem is modelled mathematically and solved using a heuristic algorithm. Experimental results to describe the performance of the algorithm are presented for different production scenarios, problem sizes, and solution strategies.     

Manufacturer's product choice in the presence of environment-conscious consumers: brown product or green product

Nowadays, the brown products are losing market coverage to their green alternatives due to consumers' increasing environmental awareness. Confronted with this threat, many traditional manufacturers currently producing only brown product are contemplating the launch of green product. Base on this background, this paper explores the optimal product choice for the manufacturer. We first derive the optimal results for each product choice. Then we analyse the optimal product choice for the manufacturer. Next, we study how to induce the production of green product. Finally, the fraudulent behaviour on product's environmental attributes is addressed. Main findings are as follows. First, manufacturer's optimal product choice is to produce green product if the investment-to-value ratio and the unit production cost for green product are low and to produce brown product if the investment-to-value ratio and the unit production cost for green product are high. Second, the two-part tariff contract is applicable to stimulate the manufacturer to produce green product under certain conditions. While exterior intervention is necessary under other conditions. Third, when the manufacturer and the retailer diverge in product preference, the manufacturer has a strong incentive to behave fraudulently, and this type of manufacturer needs strict supervision.     

Review of supply chain configuration and design decision-making for new product

The nature of competitive markets continuously pushes manufacturers to develop new products to meet the increasingly diversified customer demands. Manufacturers thus have to handle the complexities generated during the total life cycles of various product types, from product design to procurement, production, marketing and recycling. Though some management practices in mass customisation help to improve the performance of manufacturing systems, there are still some fundamental problems not covered. Joint decision-making of product and supply chain design, for example, is one of them. The existing industrial practice tends to treat these two problems separately. Decoupling these two problems decrease the design complexity but may lead to suboptimal decision outcome. To enhance understanding of the interconnected decisions for supply chain management and product design, this review collects related literature on this topic and focuses on the analysis of existing papers from an operation research perspective.     

The impact of third-party remanufacturing on the forward supply chain: a blessing or a curse?

It is widely agreed that the entry of third-party remanufacturers (TPRs) hurts original equipment manufacturers (OEMs) because remanufacturing cannibalises the new product sales. In this paper, motivated by the practice of mobile phone remanufacturing, we develop a game theoretical model to revisit the impact of third-party remanufacturing on a forward supply chain in which one OEM purchases critical components from one dominant supplier. The OEM may operate the remanufacturing business as cost-efficient as the TPR. Our analytical results show that regardless of the OEM’s remanufacturing capability, third-party remanufacturing could be beneficial to the OEM in that the supplier would lower the wholesale price as a response to the entry of the TPR; in addition, compared with the case without remanufacturing, third-party remanufacturing is always detrimental to the supplier, but the supplier should not always attempt to deter the entry of the TPR because third-party remanufacturing could be less detrimental than the OEM’s in-house remanufacturing. Under certain conditions, the two players in the forward supply chain both prefer third-party remanufacturing over in-house remanufacturing. The key intuition driving this finding is that third-party remanufacturing makes the OEM and the supplier allied; while in-house remanufacturing makes them against each other.     

Optimal policies in hybrid manufacturing/remanufacturing systems with random price-sensitive product returns

We study a production planning problem in which a manufacturer aims to meet a random market demand by manufacturing new product and remanufacturing returned product. The product returns are random and price-sensitive. To maximise his profit, the manufacturer needs to optimally decide on the acquisition price for the returned product as well as the quantities of the new product to be manufactured and the returned product to be remanufactured. We investigate two cases based on the relative lengths of the manufacturing and remanufacturing lead times. (1) In the case with a shorter manufacturing lead time, the manufacturer first decides his acquisition price for the returned product before the production starts, and then decides the quantities of manufacturing/remanufacturing after the product returns are realised. (2) In the case with a shorter remanufacturing lead time, the manufacturer first decides the manufacturing quantity and the acquisition price simultaneously, and then the remanufacturing quantity based on the quantity of manufactured and returned products. Each case is formulated as a two-stage stochastic optimisation problem, and the corresponding optimal polices of both are characterised and derived.     

Supply chain focus dependent sensitivity of the point of product differentiation

Customer preferences for variety in the product(s) with improved customer service and lower prices are forcing the supply chains to overhaul the current practices from design to operational level. Postponement or delayed differentiation of the products is one such strategy, primarily deployed in mass customisation settings. Life cycles are shrinking not only for individual products but for product families as well. In this context, supply chain responsiveness becomes one of the crucial factors that need to be effectively managed to succeed in the present day competitive markets. Our model, that considers inventory costs and the supply chain responsiveness costs would aid a supply chain manager to make informed decisions with regard to the ideal location for the point of differentiation (POD), while striking the right balance between holding costs and the supply chain responsiveness costs. We also make use of a dimensionless parameter called the ‘coefficient of inverse responsiveness’ that not only facilitates the introduction of responsiveness related costs into the model but also improves the scalability and simplifies the analysis and interpretation of the results. Based on the strategic model developed, we offer some context-specific counter-intuitive managerial insights with respect to the sensitivity of the location of the POD in a supply chain.     

基于微分对策的闭环供应链中制造商合作策略选择

以动态环境为背景，研究了存在第三方的闭环供应链中制造商合作策略选择。分别建立了制造商与回收商和零售商三方共同合作，制造商仅与回收商或零售商其中一方合作，以及三方均不合作等4种合作模型，利用微分对策理论对模型进行求解得到不同合作策略下的最优控制策略。研究发现：制造商总是存在与零售商或回收商合作的动机，制造商与零售商和回收商均合作时供应链利润以及消费者福利最高，制造商与其均不合作时供应链利润和消费者福利最低。但制造商仅与零售商合作时供应链利润是否高于其与回收商合作时的供应链利润依赖于旧产品回收效率和再制造所节约成本等。     

Assessing the economic and environmental impact of remanufacturing: a decision support tool for OEM suppliers

The circular economy is often presented as a solution for companies to increase the sustainability of their business. In many situations where suppliers produce subassemblies or modules for OEMs in a B2B context, dependency on their clients limits their options for profitable closed-loop supply chains. In this paper, we develop a simple tool suppliers can use to quickly assess whether remanufacturing is economic and environmentally attractive compared to producing new components. We derive optimal acquisition and reuse quantities that minimise total costs. Based on our analysis with a supplier in the automotive industry, we find that used core prices and remanufacturing yield rates have a large impact while an optimised design for remanufacturing can only marginally improve the situation. The tool is applicable to a wide variety of suppliers and industries that remanufacture their modules or subassemblies, or are exploring the option to engage in remanufacturing operations.     

环境绩效视角下的闭环供应链定价和协调

从供应链利润和环境绩效视角分别对集中式和分散式闭环供应链进行建模分析,得出2种不同视角下的最优定价和协调策略。结果表明,供应链基准利润提高,环境绩效变差;2种视角下,零售价和单位回收价格之间的关系是一致的;以环境绩效最大化为目标的供应链可以达到相比于以利润最大化为目标的供应链较好的环境绩效,但由于零售价较高,供应链所获得的利润减少;同一收益共享契约在不同参数设置下可以协调2种视角下的供应链。     

Cost strategy for product planning under competition

This study proposes a manufacturing system for the production of a new product, which is achieved by optimum collaboration between members of the supply chain. From the perspective of an incumbent firm, the behaviours of randomly occurring competitors could significantly affect order quantities, and the resultant profitability could diminish competitiveness in the product market. An effective method is therefore required to quantitatively evaluate the influence of competitive companies on the incumbent’s profitability. The objective of this study is to minimise the incumbent’s cost for a new product under competition through an economical cost distribution. Considering the whole life of a product in the market, the Bayesian approach is used to analyse the behaviours of competitors, the work efficiency of employees, in addition to the related costs of the incumbent firm. The adequate cost strategy for manufacturing a new product under competition can be then available.     

A technical note on ‘Analysis of closed loop supply chain using genetic algorithm and particle swarm optimisation’

This study analyses the mixed-integer linear program (MILP) proposed by Kannan et al. [Kannan, G., Noorul Hag, A., and Devika, M., 2009. Analysis of closed loop supply chain using genetic algorithm and particle swarm optimization. International Journal of Production Research, 47 (5), 1175–1200] in their paper entitled ‘Analysis of closed loop supply chain using genetic algorithm and particle swarm optimisation’. Since we find inconsistencies in the model, we propose modifications to rectify the flaws. The revised model is presented and tested using a hypothetical problem.