Production planning in a three-stock reverse-logistics system with deteriorating items under a periodic review policy

Abstract

In this paper, we study a reverse supply chain with three stocks for a firm implementing the periodic-review as policy. The first stock consists of newly manufactured items, while the second one is devoted to remanufactured items. The third stock contains all the items returned from the market. We made the following assumptions: items are not as-good-as-new, deterioration and dynamic demands affect new and remanufactured items, and dynamic customer return rate. Using optimal control theory, explicit expressions of the optimal rates in all three stocks have been provided: those for manufacturing, remanufacturing, disposal, and inventory levels. In the case where items deterioration rates are assumed to be unknown, self-tuning optimal control has also been implemented using the recursive least-squares method. Numerical examples and sensitivity analyses illustrate the results.