Managing Product Returns for Remanufacturing

Abstract

Firms are often encouraged to offer environmentally friendly products as a demonstration of corporate citizenship. However, this may prove to be an unrealistic expectation since a rational firm will only engage in profitable ventures; those that increase shareholder wealth. We develop a framework for analyzing the profitability of reuse activities and show how the management of product returns influences operational requirements. We show that the acquisition of used products may be used as the control lever for the management and profitability of reuse activities. These activities, termed product acquisition management, affect several important business decisions. First, if a firm is to pursue reuse activities, these reuse activities must be value‐creating. Second, if a firm is to compete by offering remanufactured products, then we show how product returns management influences the overall profitability of such activities via a trial and error EVA approach. Third, we show how operational issues are strongly affected by the approach used to manage product returns. There is a need for future research specifying the mathematical relationship between acquisition price and the nominal quality of the returned product.

Strategic Grading in the Product Acquisition Process of a Reverse Supply Chain

“…The research field of profit-oriented used-product acquisition management was initiated by Guide and Jayaraman (2000), and Guide and Wassenhove (2001). Prior work in the field of reverse logistics commonly assumed an exogenous return process.…”

Analyzing the Evolutionary Stability for Behavior Strategies in Reverse Supply Chain

“…The traditional forward chains/logistics construct the flows from procurement of new materials through production of new products to sell them. The reverse chains/logistics are composed of the flows from collection of used products through recycling parts from the used products to reuse the recycled parts (Aras et al, 2004;Behret and Korugan, 2009;Ferguson et al, 2009;Fleischman et al, 1997;Guide and Wassenhove, 2001;Inderfurth, 2005;Konstantaras et al, 2010;Mukhopadhyay and Ma, 2009;Nenes et al, 2010;Pokharel and Liang, 2012;Teunter and Flapper, 2011;Wei et al, 2011;Wu, 2012, Watanabe et al, 2013, Watanabe and Kusukawa, 2014. Also, a supply chain which organizes the forward chains and the reverse chains has been called as a closed-supply chain, a reverse supply chain or a green supply chain (Bakal and Akcali, 2006;Barari et al, 2012, Fleischman et al, 1997Guide et al, 2003;Inderfurth, 2005;Kaya, 2010;Lee et al, 2011;Shi et al, 2010Shi et al, , 2011Tagaras and Zikopoulos, 2008;Thierry et al, 1995;Van Wassenhove and Zikopoulos, 2010;Watanabe et al, 2013, Watanabe and Kusukawa, 2014, Wei et al, 2012Yan and Sun, 2012;Tagaras, 2007, 2008).…”

Optimal Operation for Reverse Supply Chain Incorporating Inspection Policy into Remanufacturing of Used Products

“…The reverse chains/logistics consists of the flows from collection of used products through recycling parts from the used products to reuse the recycled parts. Theoretical analyses and the marginal insights obtained from numerical examples on the reverse chains/logistics are discussed in the following previous papers: Aras et al (2004), Behret and Korugan (2009), Ferguson et al (2009), Fleischman et al (1997, Guide (2000), Guide and Wassenhove (2001), Inderfurth (2005), Konstantaras et al (2010), Kusukawa and Akizawa (2015), Nenes et al (2010), Pochampally et al (2009), Pokharel and Liang (2012), Savaskan and Van Wassenhove (2006), Tang and Teunter (2006), Teunter and Flapper (2011), Watanabe and Kusukawa (2014), Watanabe et al (2013), Wei et al (2011), Wu (2012), Zhang et al (2014).…”

“…Theoretical analyses and the marginal insights obtained from numerical examples regarding the effects of inspection and sorting of used products on the optimal tactical production planning in RSC are discussed in the following previous papers: Aras et al (2004), Behret and Korugan (2009), Ferguson et al (2009), Guide and Van Wassenhove (2001), Guide et al (2003), Konstantaras et al (2010), Nenes et al (2010), Tagaras and Zikopoulos (2008), Tagaras, (2007, 2008). Tagaras (2007, 2008) and Van Wassenhove and Zikopoulos (2010) incorporated some quality classification errors into a RSC.…”

“…Zikopoulos and Tagaras (2007) investigated how uncertainty regarding the quality of returned products in two collection sites affected the profitability of reuse activities and derived the unique optimal solution (procurement and production quantities). In Guide and Van Wassenhove (2001) and Ferguson et al (2009), returned products were assumed to have N quality categories, and the procurement prices and the remanufacturing costs were different based on the corresponding quality level. Behret and Korugan (2009) discussed a remanufacturing stage with uncertainties in the quality of remanufacturing products, return rates and return times of returned products.…”