Abstract
Remanufacturing presents an option to recover value from used products. However, hybrid (re)manufacturing (i.e. simultaneous manufacturing and remanufacturing) is a challenge, owing to non-uniform availability and heterogeneous quality of returns. In this paper, we examine how heterogeneous quality and non-uniform quantity of returns influence the optimal production rates and inventory levels in a hybrid (re)manufacturing system that incurs costs to readjust manufacturing and remanufacturing capacities on a temporary basis. Specifically, we propose a mixed integer linear programming (MILP) based approach to obtain the optimal production plan for a specified planning horizon. We apply the proposed model to the (representative) operational data of an office equipment manufacturer to evaluate the impacts of quality of returns, quality-based segregation of returns, and capacity readjustment costs. The study provides insights into the effects of trade-offs among different operational costs in a hybrid (re)manufacturing system.
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