Impact of incorporating customer preference in sustainable remanufacturing of commercial returns

Abstract

This paper investigates optimum production parameters for a reverse supply chain for manufacturing of primary products and remanufacturing of commercial returns (products returned by customers for refund or exchange). The market for the product consists of two categories, the primary and remanufactured products. The demands for these markets are independent and considered to be random variables following a normal distribution function. The approach presented in this work differs from many previously published works because the acceptability of products varies among customers. The interaction between the designed quality and variable customers’ preferences determines the likelihood of a product being returned. Two major decision variables targeted in this study are the production cycle time and the targeted quality for production of parts used in the product. Through an analytical formulation and numerical examples, a relationship between the total profit of the system and the two decision variables is developed and optimised. The analysis demonstrates that the total profit of the hybrid system could be increased significantly by targeting the optimum targeted (not necessarily the highest) values for quality of parts and the optimum cycle length. And this objective could be accomplished with significant gain with respect to sustainability and waste reduction.