Title: A closed-loop recycling system with a minimum allowed quality level on returned products

Authors: Hark Hwang, Young Dae Ko, Sang Hun Yune, Chang Seong Ko

Addresses: Department of Industrial and Systems Engineering, Korea Advanced Institute of Science and Technology (KAIST), 373-1 Kusong-dong Yusong-gu, Daejon 305-701, Korea. ' Department of Industrial and Systems Engineering, Korea Advanced Institute of Science and Technology (KAIST), 373-1 Kusong-dong Yusong-gu, Daejon 305-701, Korea. ' Department of Industrial and Systems Engineering, Korea Advanced Institute of Science and Technology (KAIST), 373-1 Kusong-dong Yusong-gu, Daejon 305-701, Korea. ' Department of Industrial and Management Engineering, Kyungsung University, Daeyeon-dong, Nam-gu, Busan 608-736, Korea

Abstract: This paper deals with a closed-loop recycling system in which a stationary demand is satisfied by remanufactured products as well as newly manufactured products. In this system, only those used products that satisfy a minimum allowed quality level are bought back from customers for recycling. Thus the collection rate of used products is expressed as a function of the quality level and the unit bought-back price. It is assumed that the cycle consists of a single remanufacturing run and a single manufacturing run, both in Economic Production Quantity settings. Treating the quality of recycled products as a random variable, we develop a mathematical model with the objective of minimising the production and inventory costs. The decision variables are the length of the cycle, the minimum allowed quality level and the unit bought-back price of used products. To illustrate the validity of the model, sample problems are solved.

Keywords: closed-loop recycling systems; minimum allowed quality levels; bought-back price; remanufacturing; used products; EPQ; economic production quantity; mathematical modelling.

DOI: 10.1504/IJSOM.2009.026773

International Journal of Services and Operations Management, 2009 Vol.5 No.6, pp.758 - 773

Published online: 26 Jun 2009 *

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