Multiperiod remanufacturing planning with uncertain quality of inputs

Abstract

In this paper, we consider production planning when inputs have different and uncertain quality levels, and there are capacity constraints. This situation is typical of most remanufacturing environments, where inputs are product returns (also called cores). Production (remanufacturing) cost increases as the quality level decreases, and any unused cores may be salvaged at a value that increases with their quality level. Decision variables include, for each period and under a certain probabilistic scenario, the amount of cores to grade, the amount to remanufacture for each quality level, and the amount of inventory to carry over for future periods for ungraded cores, graded cores, and finished remanufactured products. Our model is grounded with data collected at a major original equipment manufacturer that also remanufactures. We formulate the problem as a stochastic program; although it is a large linear program, it can be solved easily using Cplex. We provide a numeric study to generate insights into the nature of the solution.