Production Decisions in Remanufacturing with Uncertain Return and Demand

Abstract

In this paper we analyze a reverse supply chain system that satisfies the market demand with remanufactured products. Demand is assumed to be random and the expected return is to be price-dependent. A firm needs to make recovery and production decision in the face of this uncertainty. We analyze both centralized and decentralized models to determine the optimal acquisition price and the optimal production quantities of remanufactured product for the firm. We also coordinate the decentralized systems with a two-part tariff contract and determine the optimal contract parameters. Finally, we present our numerical analyses to observe the effect of cost parameters on the system performance.