Inventory optimization in a green environment with two warehouses

Abstract

Recently, the environment requires more emphasis on reverse logistics in order to maintain sustainability of the human civilization. The article introduces a sustainable model for reverse logistics that is based on two storage facility. Generally speaking, the essential commodities are considered to be decaying in nature. In this model, finite replenishment rate is considered and managed by the forward as well as reverse supply chain. In the beginning, the remanufactured and newly manufactured products are stored in owned warehouses (OW) that have limited storage space and for the excess amount; suppliers hire a rented warehouses (RW) at a higher holding cost than owning warehouses. The objective of this model is to obtain the optimal production and remanufacturing strategies to minimize the total relevant costs of the system. The paper concludes with an illustration of numerical data and a sensitivity analysis. Based on the results, the practitioners are advised to reduce the cycle length if the production rate is relevantly high. Thus it will reduce the holding cost, eventually the total cost of the system.