Inventory Management of Remanufacturable Products

Abstract

We address the procurement of new components for recyclable products in the context of Kodak's single-use camera. The objective is to find an ordering policy that minimizes the total expected procurement, inventory holding and lost sales cost.Distinguishing characteristics of the system are the uncertainty and unobservability associated with return flows of used cameras. We model the system as a closed queueing network, develop a heuristic procedure for adaptive estimation and control, and illustrate our methods with disguised data from Kodak. Using this framework, we investigate the effects of various system characteristics such as informational structure, procurement delay, demand rate and length of the product's life cycle.

Time Value of Commercial Product Returns

“…Because we are concerned with net asset value recovered, it is important to model the returns process as part of a closed-loop system that integrates the flows of the traditional forward chain with the reverse chain. Conceptually, our model is similar to the queuing model that Toktay, Wein and Zenios (2000) use to analyze a specific problem in the remanufacturing of disposable cameras.…”

Quantitative Models for Reverse Logistics

“…• Toktay et al (1999) consider inventory management for Kodak's single-use cameras (see also Chapter 1). Printed circuit boards for the production of these cameras are either bought from overseas suppliers or remanufactured from the cameras returned by the customers via photo laboratories.…”

“…Some recovery process transforms recoverable items into serviceables. As examples consider empty versus re-filled beverage containers (see Elmendorp, 1997), returned versus inspected printed circuit boards (see Toktay et al, 1999), and used versus remanufactured car parts (Van der Laan, 1997). In general, both recoverable and serviceable items may be stocked, leading to a system of two serial inventories.…”

“…In addition, all examples include an alternative supply Figure 6.1: Framework for inventory control with Reverse Logistics source that is fully controllable to replenish the serviceable stock. One may think of the supply of 'virgin' printed circuit boards (Toktay et al, 1999), medical devices (Rudi and Pyke, 1999), and computer spare parts (see Chapter 2) for example.…”

“…In other situations the causal relation appears to be reversed, in that demand entails a subsequent return, typically after a certain time lag. We recall the cases of single-use cameras (Toktay et al, 1999) and beverage containers (Elmendorp, 1997) as examples. In yet other situations, there may be no closed loop at all and no direct relation between demand and returns.…”