Effects of Random Yield in Remanufacturing with Price‐Sensitive Supply and Demand

İsmail Serdar Bakal · Elif Akçalı

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Sustainable Supply Chain Management Supply Chain and Inventory Management Recycling and Waste Management Techniques

Abstract

In this study, we investigate the effects of recovery yield rate on pricing decisions in reverse supply chains. Motivated by the automotive parts remanufacturing industry, we consider an end‐of‐life product from which a particular part can be recovered and remanufactured for reuse, and the remainder of the product can be recycled for material recovery. Both the supply of end‐of‐life products and demand for remanufactured parts are price‐sensitive. Yield of the recovery process is random and depends on the acquisition price offered for the end‐of‐life products. In this setting, we develop models to determine the optimal acquisition price for the end‐of‐life products and the selling price for remanufactured parts. We also analyze the effects of yield variation to the profitability of remanufacturing, benefits of delaying pricing decisions until after yield realization, and value of perfect yield rate information.

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1997Quantitative models for reverse logistics: A review 1999Issues in environmentally conscious manufacturing and product recovery: a survey 2000Production planning and control for remanufacturing: industry practice and research needs 1995Lot Sizing with Random Yields: A Review 2000A characterisation of logistics networks for product recovery 2001MANAGING PRODUCT RETURNS FOR REMANUFACTURING 2003Matching Demand and Supply to Maximize Profits from Remanufacturing 2000Supply-Chain Management for Recoverable Manufacturing Systems

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