Title: Supply planning for a closed-loop system with uncertain demand and return

Authors: Sanjida Rouf, Guoqing Zhang

Addresses: Supply Chain – Perfumery, Firmenich Inc., 250 Plainsboro Road, Plainsboro NJ 08536, USA. ' Industrial and Manufacturing System Engineering Department, University of Windsor, Ontario N9B 3P4, Canada

Abstract: This paper considers a supply network consisting of a manufacturer, its external suppliers, and a remanufacturing facility. The manufacturer, facing an uncertain market demand and return, has two options for supplying parts: either ordering the required parts from external suppliers or remanufacturing used products and bringing those back to |as good as new| conditions. We proposed a general framework for this multi-product, closed-loop system and developed a non-linear programming (NLP) model to maximise the total expected profit by optimally deciding quantity of parts to be remanufactured and quantity of parts to be purchased from external suppliers. We solved the mathematical model using GAMS and CONOPT. With a numerical example, we introduced sensitivity analysis to illustrate the interacting effects among critical parameters in the model.

Keywords: supply planning; closed-loop; uncertain demand; uncertain return; nonlinear programming; supply chain management; SCM; supply networks; mathematical modelling; remanufactured parts; external suppliers.

DOI: 10.1504/IJOR.2011.039709

International Journal of Operational Research, 2011 Vol.10 No.4, pp.380 - 397

Available online: 14 Apr 2011 *

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