Production-inventory model for two-echelon closed-loop supply chain with finite manufacturing and remanufacturing rates

Abstract

ABSTRACTThis research develops a two-echelon closed-loop supply chain production-inventory model consisting of a manufacturer, a remanufacturer and a retailer. The retailer faces a constant demand from the customers, which is satisfied by new and remanufactured product received from the manufacturer and the remanufacturer, respectively. The manufacturer and remanufacturer produce the product in batches with finite production rate. The manufacturer procures raw material in batches from outside supplier, and the remanufacturer receives the used product from the customers at a constant return rate. Many studies in the area of forward supply chain have established that the centralised production-inventory control models provide better results than the decentralised models. Hence, with synchronised activities of the supply chain players, this research proposes to find an optimal production-inventory policy of the players by minimising the joint total cost of the two-echelon closed-loop supply chain. Numerical illustration is presented to demonstrate the solution procedure and a sensitivity analysis is carried out to examine the impact of key parameters of the problem. Also, the total cost of closed-loop supply chain model is compared with the total cost of the corresponding forward supply chain model.