Managing Condition Variability in Remanufacturing
Galbreth, Michael Ryan
:
2006-04-14
Abstract
The condition of the used items acquired for remanufacture is often highly variable, and this variability creates numerous management challenges for remanufacturing firms. Management decisions regarding whether or not a given item should be remanufactured and where that remanufacturing should occur can be quite complex in practice. Sorting policies – the rules specifying which used products should be remanufactured and at which facility – have received limited attention in the literature. In this work, I examine the case of a remanufacturer who acquires unsorted used products as needed, e.g. from third party brokers. First, I derive optimal acquisition and sorting policies to meet both known and uncertain demands when the yield for a given sorting policy is deterministic and the firm operates a single remanufacturing facility. I then extend the analysis to the case where yield is uncertain, presenting both a newsvendor-type heuristic as well as an exact algorithm for determining optimal policies in these cases. Finally, I consider an environment in which both domestic and offshore facilities are available for remanufacturing. By analyzing both a two-period model and a multi-period model with ongoing demand, I identify situations in which domestic-only, offshore-only, and a mixed strategy using both facilities are optimal. This work contributes to the remanufacturing literature by presenting a variety of models, applicable to a wide range of remanufacturing environments, for managing used product condition variability through the optimal acquisition and sorting of used items.