Optimal production opportunities in a remanufacturing system

Abstract

In recent years, remanufacturing has emerged in various industrial sectors, and it adds an additional production alternative apart from the conventional manufacturing process. With remanufacturing, a used return product is often disassembled, reprocessed, and then reassembled into a new product. The remanufactured product is often of the same quality as those from regular manufacturing. Even though remanufacturing saves a substantial cost of materials, it often requires more labour and other inputs. Thus, it becomes important to examine the expanded production opportunity of the system. In this paper, we therefore make a first attempt to model such a system with respect to its optimal production. This model is based on the Cobb–Douglas (Wicksell) production function. More specifically, we focus on how labour costs, material costs, and the budget influence optimal production decisions. Explicit properties of the optimal plan are derived and presented as theorems. Results of this study are intended to provide a guideline for managers to make sound decisions, when dealing with the increasingly important remanufacturing systems.