Appropriately limiting quantities of remanufacturing products considering virtual inventory for stabilization of production resources

Abstract

As environmental problems become more apparent, manufacturers need to balance environmental considerations with economic activities. This is where closed-loop supply chains are gaining attention. However, in addition to demand fluctuations, which are a problem in conventional supply chains, a circular supply chain is unstable in terms of supply, where end-of-life products are collected and reused. This destabilizes not only excess inventory and shortages but also production resources, such as manpower, facilities, and raw materials. This study focuses on the stabilization of the manufacturing system in a closed-loop supply chain. To confirm the dynamic changes in the manufacturing system, we designed a simulation model of a closed-loop manufacturing system and conducted numerical experiments under several scenarios, taking the variation of manufacturing quantity per unit period as an evaluation measure of stability. After showing that unplanned remanufacturing destabilizes the recovery of reusable end-of-life products, we demonstrate that the manufacturing system can be stabilized by appropriately limiting the amount of remanufacturing. However, excessive limits reduce opportunities for remanufacturing end-of-life products and generate adverse economic and environmental impacts. To determine appropriate restrictions, it is necessary to consider the product currently in use by the customer as a virtual inventory and to consider factors such as the quality of the products in the virtual inventory. In the future, we plan to study a system that can dynamically manage remanufacturing quantities based on the status of virtual inventories.