Simple Heuristics for Push and Pull Remanufacturing Policies

Abstract

Inventory policies for joint remanufacturing and manufacturing have recently received muchattention. Most efforts, though, were related to (optimal) policy structures and numericaloptimization, rather than closed form expressions for calculating near optimal policy parameters.The focus of this paper is on the latter. We analyze an inventory system with unit product returns and demands where remanufacturing is the cheaper alternative for manufacturing. Manufacturing is also needed, however, since there are less returns than demands. The cost structure consists of setup costs, holding costs, and backorder costs. Manufacturing and remanufacturing orders have non-zero lead times. To control the system we use certain extensions of the familiar (s,Q) policy, called push and pull remanufacturing policies. For all policies we present simple, closed form formulae for approximating the optimal policyparameters under a cost minimization objective. In an extensive numerical study we showthat the proposed formulae lead to near-optimal policy parameters.

Keywords: inventory control, remanufacturing, heuristics

JEL Classification: M, M11, R4, C61