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Managing the Reverse Channel with RFID‐Enabled Negative Demand Information
Abstract
We analyze the inventory decisions of a manufacturer who has ample production capacity and also uses returned products to satisfy customer demand. All returned items go through an evaluation process, at the end of which the decision of disposal, direct reselling, or rework is made for each unit according to a predetermined procedure. We quantify the value of information/visibility on the reverse channel for the manufacturer by making comparisons among three approaches: No information-naive; no visibility-enlightened; and full visibility. We find the value of visibility increases with the comparative length of the reverse channel and volume, volatility, and usability of returns. Furthermore, the smarter the manufacturer, the less benefit visibility brings to the system. By this analysis, we quantify the visibility savings of radio frequency identification (RFID) in the reverse channel as a candidate enabler technology. We also provide numerical examples to show that practical approximations in inventory management may have acceptable penalties to the manufacturer with visibility.
... Reverse supply chain models can be broadly classified into two groups namely deterministic [4,9,24,28,41,43,51] and stochastic [3,5,11,20,45,46,48,53], where stochastic models can be further classified as continuous or periodically reviewed models. Akçali and Çetinkaya [2] went even further in classifying periodic review models based on the number of stock points, dependency of return rates on demand, length of planning horizon and the consideration of lead time. ...
... Akçali and Çetinkaya [2] went even further in classifying periodic review models based on the number of stock points, dependency of return rates on demand, length of planning horizon and the consideration of lead time. Most of the models published thus far assume that demand and return rates are independent [10,20,21,37,44]. Although this assumption simplifies the model significantly, the dependency of the return rate on demand is a realistic assumption [23,47]. ...
... The possibility of remanufacturing for Type A demand is dependent on the availability of sufficient recoverable stock to make at least a batch of remanufactured Type A items, this is expressed in (20). If Type A recoverable inventory is not up to the quantity required for a remanufacturing batch of Type A items, a manufacturing batch will have to be released. ...
Natural resource scarcity has accelerated considerations of return logistics in manufacturing processes. Most supply chain designs now consider a closed-loop design where demand can be satisfied by both newly manufactured goods as well as remanufactured returns, allowing for maximum value creation over the entire life cycle of a product. This paper proposes an inventory system where returns are constrained and returns that cannot be remanufactured to an as-good-as-new state of the original product can be used to satisfy a secondary demand. It is also assumed that some items fail during manufacturing and these items are treated as returns that can be remanufactured to satisfy one of two types of demand. Returns are remanufactured to one of two states such that items that may not be remanufactured to an as-good-as-new state of the first product can satisfy a secondary customer demand at a lower grade. The remanufacturing processes require some other components to be procured in order to bring the returned items back to either of the two states of reuse. A modified Wagner/Whitin model for the alternate application of remanufacturing and manufacturing for the satisfaction of the top range item demand and supplemented by a modified reverse Wagner/Whitin model for the remanufacturing of the lower variety items is derived to solve the dynamic lot sizing model proposed in this paper. The model aims to minimize cost across a horizon and the total cost proves to be very sensitive to the manufacturing setup cost and the proportion of demand returned for remanufacturing.
... The return-product category is the information on quantity, timing, and condition of return product. The value of return-product information has received growing attention with the recent development of reverse supply chains (Karaer & Lee, 2007;Flapper et al., 2012;Panagiotidou et al., 2017). The supply category includes information on supplier characteristics and supply quantity. ...
... Tracking devices installed at all the transportation stages (Karaer & Lee, 2007) Inventory level The information only includes mean and variance of the distributions Detailed values (Mukhopadhyay et al., 2008) Product cost (de Brito & van der Laan, 2009) Demand, product return (Cheong & Song, 2013) Yield (Wagner, 2015) Demand (Byrne & Heavey, 2006) Demand Production capacity ...
... x (Karaer & Lee, 2007) Return-product location and quantity Lead time of reverse channel ...
Data and information flows in agro-food supply chains have exponentially increased due to diverse embedded tracking/sensing devices, ubiquitous usage of computer systems, and increasing data/information sharing among firms. This promises a huge potential value when the data are gathered and turned into information/knowledge that can be used to make better decisions. Focusing on agro-food logistics management, this PhD thesis investigates how to utilize available data/information in agro-food supply chains to improve logistics processes. Using the Dutch floriculture supply chain network as the case study platform, this research particularly deals with logistics challenges caused by the increasing trend of customer orders in the agro-food sector: high frequency, numerous order lines of small volumes, and short required delivery lead-times.
The first part of the thesis helps readers gain a better understanding of the value of data/information in supply chain decision-making. First, it presents a generic framework to assess the value of information (VOI) in supply chain decisions along the four primary dimensions: “supply chain decisions”, “information”, “modelling approach”, and “supply chain context”. Second, it extends the “supply chain decisions” and “information” dimensions to propose a multi-level framework that explains how data and big data are actually linked to supply chain decisions at different levels, i.e., short-term or long-term and individual-firm level or supply-chain level.
The second part of the thesis applies the VOI framework and the multi-level framework to the case of the Dutch floriculture sector. At the individual-firm level, the thesis examines the uses of common information types at agro-food suppliers and crossdocking facilities. For suppliers, the thesis proposes a data-driven process redesign, which uses historical customer orders to redesign the order fulfilment process for a higher delivery service level and a lower operational cost. For cross-docking distribution, the value of inbound and outbound information are examined in enhancing cross-docking internal processes. At the supply-chain level, the thesis demonstrates the value of the booming data collected from the tracking & tracing systems in the sector. It is shown that the data can support strategic and real-time supply chain coordination and collaboration to improve the efficiency and effectiveness of logistics processes in the sector.
... The return-product category is the information on quantity, timing, and condition of return product. The value of return-product information has received growing attention with the recent development of reverse supply chains (Karaer & Lee, 2007;Flapper, Gayon, & Vercraene, 2012;Panagiotidou, Nenes, Zikopoulos, & Tagaras, 2017). The supply category includes information on supplier characteristics and supply quantity. ...
... Delivery lead-time information also reduces the uncertainty of replenishment arrival time and subsequently contributes to better decisions on order quantity (Rached, Bahroun, & Campagne, 2016;Rached et al., 2015). Return-product quantity information is also useful in making decisions on production plans for new products (Karaer & Lee, 2007). ...
... AnalyticalBakal and Akcali (2006),Hsiao and Shieh (2006),Ketzenberg et al. (2006),Lin and Tsao (2006),Chiang and Feng (2007),Karaer and Lee (2007),Ganesh et al. (2008),Ha and Tong (2008),Wu and Edwin Cheng (2008),Yao and Dresner (2008), Chen and Lee(2009), Liu et al. (2009), Shang et al. (2010), Bakal et al. (2011), Jakšič, Fransoo, Tan, De Kok, and Rusjan (2011), Xue et al. (2011), Axsäter and Viswanathan (2012), Chen, Liang, and Li (2012), Yang et al. (2012), Cho and Lee (2013), Ganesh, Raghunathan, and Rajendran (2014a), Ganesh, Raghunathan, and Rajendran (2014b), Giloni, Hurvich, and Seshadri (2014), Lee and Cho (2014), Ruiz-Benítez et al. (2014), Salzarulo and Jacobs (2014), Cannella et al. (2015), Cui et al. (2015), Kwak and Gavirneni (2015), Rached et al. (2015), Wagner (2015), Babai et al. (2016), Bian et al. (2016), Bryan et al. (2016), Sabitha, Rajendran, Kalpakam, and Ziegler (2016), Banerjee and Golhar (2017), Huang and Wang (2017), Li and Wang (2017), Lu et al. (2017), Panagiotidou et al. (2017) Game theory Mukhopadhyay et al. (2008), Wu et al. (2011), Yan and Pei (2012, 2015), Ma et al. (2017), Zhang, Zhu, and Gou (2017) Dynamic programming Ferguson and Ketzenberg (2008), Ketzenberg (2009), Davis et al. (2011), Flapper et al. (2012), Bendre and Nielsen (2013), Kaman et al. (2013), Ketzenberg et al. (2013), Ketzenberg et al. (2015), Yang et al. (2016), Flamini et al. (2017), Gaukler, Ketzenberg, and Salin (2017) Integer programming Tjokroamidjojo et al. (2006), Chen et al. (2007), Krikke et al. (2008), Thomas, Krishnamoorthy, Venkateswaran, and Singh (2015) Stochastic programming Cheong and Song (2013), Bryan and Srinivasan (2014), Rijpkema, Hendrix, Rossi, and van der Vorst (2016) Mixed-integer programming Zolfagharinia and Haughton (2014), Kaur and Singh (2017) Heuristics Ferguson and Ketzenberg (2006), Viswanathan et al. (2007), Flamini et al. (2011), Larbi et al. (2011), Dettenbach and Thonemann (2015) Data mining Lin et al. (2009), Yi (2014), Lee (2017), Tsai and Huang (2017), Cui et al. (2017) Big data analytics Zhong et al. (2015) Forecasting de Brito and van der Laan (2009), Williams and Waller (2011), Scott (2015), Steinker et al. (2017) Monte Carlo simulation Sohn and Lim (2008), Salinas Segura and Thiesse (2017) System dynamics Hussain and Drake (2011), Li, Pedrielli, Lee, and Chew (2016) Discrete-event simulation Byrne and Heavey (2006), Choudhury et al. (2008), Kim et al. (2008), Schmidt (2009), Liu and Kumar (2011), Rijpkema, Rossi, and van der Vorst (2012), Jonsson and Mattsson (2013), Rached et al. ...
The purpose of this paper is to provide a structured overview of the value of information in different supply chain decisions and to identify a research agenda based on the current state of research on the topic. The paper uses the systematic literature review methodology to review journal articles published in the 12-year period from 2006 to 2017. Each selected study is analyzed using a rigorous review framework of four primary dimensions, including “supply chain decisions”, “information”, “modelling approach”, and “context”. The review of articles shows that the current literature is rich in assessing the value of information in inventory decisions, yet insufficient in other supply chain areas such as facility, transportation, sourcing, and pricing. In addition, the value of information is subject to contextual supply chain parameters and varies in accordance with the characteristics of the information (such as accuracy, timeliness, and completeness). Furthermore, the focus of the existing literature is on “information availability” in supply chain decisions, and the impact of important information characteristics on the value of information has not been studied extensively. The research on information timeliness and its influence on supply chain performance is especially limited. Based on the discussion and results of our review, a research agenda is offered and sample research questions are discussed.
... The return-product category is the information on quantity, timing, and condition of return product. The value of return-product information has received growing attention with the recent development of reverse supply chains (Karaer & Lee, 2007;Flapper, Gayon, & Vercraene, 2012;Panagiotidou, Nenes, Zikopoulos, & Tagaras, 2017). The supply category includes information on supplier characteristics and supply quantity. ...
... Complete information Demand, return quantity, recovery rate A limited number of information signals to limit the range of the variables Infinite number of information signals (Bakal & Akcali, 2006) Yield rate Different support for uniform distribution, e.g. (0, 1), (0.4, 0.6) Uniform distribution with very small interval (Chen, Yang, & Yen, 2007) Inventory, demand, capacity Sharing 1 or 2 types of information Sharing 3 types of information Tracking devices installed at all the transportation stages (Karaer & Lee, 2007) Inventory level ...
... Analytical (Bakal & Akcali, 2006), (Hsiao & Shieh, 2006), , (Lin & Tsao, 2006), (Chiang & Feng, 2007), (Karaer & Lee, 2007), (Ganesh et al., 2008), (Ha & Tong, 2008), (Wu & Edwin Cheng, 2008), (Yao & Dresner, 2008), (Chen & Lee, 2009), (Liu et al., 2009), (Shang et al., 2010), (Bakal et al., 2011), (Jakšič, Fransoo, Tan, De Kok, & Rusjan, 2011), (Xue et al., 2011), (Axsäter & Viswanathan, 2012), (Chen, Liang, & Li, 2012), (Yang, Aydin, Babich, & Beil, 2012), (Cho & Lee, 2013), (Ganesh, Raghunathan, & Rajendran, 2014a), (Ganesh et al., 2014b), (Giloni, Hurvich, & Seshadri, 2014), (Lee & Cho, 2014), (Ruiz-Benítez et al., 2014), (Salzarulo & Jacobs, 2014), (Cannella et al., 2015), (Cui et al., 2015), (Kwak & Gavirneni, 2015), (Rached et al., 2015), (Wagner, 2015), (Babai et al., 2016), (Bian, Shang, & Zhang, 2016), (Bryan et al., 2016), (Sabitha, Rajendran, Kalpakam, & Ziegler, 2016), (Banerjee & Golhar, 2017), (Huang & Wang, 2017), (Li & Wang, 2017), (Lu et al., 2017), (Panagiotidou et al., 2017) Game theory (Mukhopadhyay et al., 2008), (Wu, Zhai, Zhang, & Xu, 2011), (Yan & Pei, 2012, (Ma, Shang, & Wang, 2017), (Zhang, Zhu, & Gou, 2017) Dynamic programming (Ferguson & Ketzenberg, 2008), (Ketzenberg, 2009), (Davis et al., 2011), (Flapper et al., 2012), (Bendre & Nielsen, 2013), (Kaman et al., 2013), (Ketzenberg et al., 2013), (Ketzenberg et al., 2015), (Yang et al., 2016), (Flamini et al., 2017), (Gaukler, Ketzenberg, & Salin, 2017) Integer programming (Tjokroamidjojo et al., 2006), (Chen et al., 2007), (Krikke, le Blanc, van Krieken, & Fleuren, 2008), (Thomas, Krishnamoorthy, Venkateswaran, & Singh, 2015) Stochastic programming (Cheong & Song, 2013), (Bryan & Srinivasan, 2014), (Rijpkema, Hendrix, Rossi, & van der Vorst, 2016) Mixed-integer programming (Zolfagharinia & Haughton, 2014), (Kaur & Singh, 2017) Heuristics (Ferguson & Ketzenberg, 2006), (Viswanathan et al., 2007), (Flamini et al., 2011), (Larbi et al., 2011), (Dettenbach & Thonemann, 2015) Data mining (Lin et al., 2009), (Yi, 2014), (Lee, 2017), (Tsai & Huang, 2017), (Cui et al., 2017) Big data analytics (Zhong et al., 2015) Forecasting (de Brito & van der Laan, 2009), (Williams & Waller, 2011), (Scott, 2015), (Steinker et al., 2017) Monte Carlo simulation (Sohn & Lim, 2008 Table 5. The uses of different information types in supply chain decisions ...
... 4 Model Analysis Gaukler et al. (2007) and other researchers assessed the benefits from the use of RFID through the elimination of product mishandling at various stages of the supply chain. Karaer and Lee (2007) considered the added value of RFID in providing full visibility on the products returned by customers. However, the returned flow of repair components, although similar, is not exactly identical with the case of the inverse supply chain conducted by Karaer and Lee (2007). ...
... Karaer and Lee (2007) considered the added value of RFID in providing full visibility on the products returned by customers. However, the returned flow of repair components, although similar, is not exactly identical with the case of the inverse supply chain conducted by Karaer and Lee (2007). We proposed a mathematical model to compute the value of RFID in aircraft maintenance. ...
... We proposed a mathematical model to compute the value of RFID in aircraft maintenance. The model, although partly similar to the idea of Karaer and Lee (2007) in the evaluation of per-lead-time-period cost for almost riskless replenishment and the determination of optimal stock level with and without RFID, distinguishes itself from theirs by also considering the effect of steady state circulating flow damaged components during their pairing cycles. Our model then also embraces the crucial computation of the cost incurred due to the total expected delay caused by mishandling of the damaged components at various stages of the repairing process. ...
The value of Radio Frequency Identification (RFID) in the maintenance of supply chains of aircraft parts is examined, particularly in the proposed analytical model. This model helps us gain a better understanding of the relationships between various costs incurred and the RFID effect on an aircraft maintenance tracking process. Using an RFID system, a maintenance company specializing in aircraft parts can accumulate savings based on the assumption that the technology can eliminate inaccuracy problems related to inventory recording delays brought about by mishandling in the component repair process. This case study illustrates such phenomenon through the use of numerical assumptions, highlighting the benefits of RFID. Further, the value of RFID in aircraft maintenance is evaluated using sensitivity analysis, in accordance with the parameters of the model of cost reductions in mishandling repair components and inventory control. The findings support the industry's acceptance of RFID technology, proving that this is beneficial to maintenance companies of aircraft parts.
... The rate at which end-of-life products are returned as well as interruptions/variations in recycling or remanufacturing operations are amongst the most common uncertainty types (Esmaeilikia et al., in press). This well justifies the growing interest in development of stochastic inventory control models for reverse supply chains (van der Laan and Karaer and Lee, 2007;Behret and http://dx.doi.org/10.1016/j.tre.2014.04.010 1366-5545/Crown Copyright Ó 2014 Published by Elsevier Ltd. All rights reserved. ...
... Richter and Dobos, 2004;Tang and Teunter, 2006;Atasu and Çetinkaya, 2006;Konstantaras and Papachristos, 2008;Teunter et al., 2009;Zanoni et al., 2012;Feng et al., 2014;Özceylan et al., 2014) and stochastic models. Stochastic models have been broadly discussed in two streams of continuous (e.g., Fleischmann et al., 2002;Aras et al., 2004;Behret and Korugan, 2009;Timmer et al., 2013) and periodically reviewed models (e.g., Vlachos and Dekker, 2003;Karaer and Lee, 2007;Zolfagharinia and Haughton, 2012;van Donselaar and Broekmeulen, 2013). We aim to make contributions to the stochastic and periodically reviewed modeling literature. ...
... Most of the published models assume the independency of demand and return rates (e.g. Heisig and Fleischmann, 2001;Teunter and Vlachos, 2002;Kiesmüller and Scherer, 2003;Fleischmann and Kuik, 2003;Karaer and Lee, 2007;Shi et al., 2011). There are two primary reasons for this assumption. ...
This paper develops an inventory control model for a reverse supply chain with separate serviceable and remanufacturable inventory stock points. Return rate is expressed stochastically as a function of product demand. Variation in demand distribution during product life-cycle is modeled using a new order-up-to replenishment policy incorporating five maximum inventory levels corresponding to five product life cycle stages. A near optimum solution to this problem is sought using a hybrid solution method integrating a discrete event simulation with a meta-heuristic search method. Real data from an Australian case company is utilized to design test experiments for model validation and evaluation.
... Most prior research models such as those presented in (Fleischmann & Kuik, 2003;Karaer & Lee, 2007;Shi, Zhang, & Sha, 2011;Zhou, Tao, & Chao, 2011) assume that the quantity of return is independent of the demand of remanufactured or manufactured products. Such an assumption is owed to the need to reduce model complexities (Kim, Saghafian, & Van Oyen, 2013;Vercraene & Gayon, 2013;Zerhouni, Gayon, & Frein, 2013). ...
A key strategic consideration in any remanufacturing system is to ensure accurate disposition decisions for returns to maximize the process efficiency and overall profit margin. The purpose of this paper is to develop a disposition decision-making model for a remanufacturing process in which the inventory capacity of recoverable returns is limited, there’s a constant demand to be met, and the remanufactured product must meet a minimum quality grade threshold. The paper presupposes that the quality of returns is uncertain and remanufacturing cost is dependent on the quality grades. In this model, remanufacturing takes place when there is demand for remanufactured products. Accepted returns that meet the minimum quality threshold undergo the remanufacturing processes, and any unacceptable returns are salvaged. A continuous time Markov chain (CTMC) is presented and the Matrix-Geometric method is applied to evaluate several key performance metrics for this system and depict the optimal disposition policy. Our numerical study shows an intricate trade-off between the acceptable quality value and the recoverable inventory capacity. Particularly, there is periodic system starvation whenever there is a mismatch between these two system values. As a result, changes to the demand rate for remanufactured products has a great impact on the need to re-evaluate the existing system configuration.
... Similarly, [23] studies the RFID impact regarding the elimination of inventory discrepancy in a multi-echelon retail supply chain. Costsavings is the common perspective taken by many papers in this stream (see for example [24], [25], [26], [27], [28], [29], [30], and [31]) As for others, [32] and [33] focus on the profit impact of RFID through a Newsvendorlike setting whereas [34] assesses the profitability impact of RFID in the inventory management of vending machines. [35] and [36] study the use of RFID technology in warehouse and outbound logistics operations, respectively. ...
... Debo et al. [15] studied manufacturer's joint pricing and the selection of production technologies when the remanufacturing product had lower cost and market value. According to the three kinds of processing models (discard, resell, and reprocess), Karaer and Lee [16] studied manufacturers' recycling inventory models under the three kinds of information. Hammond and Beullens [17] built double-layer closed-loop supply chain network equilibrium model of manufacturers-consumer market by integrating forward and reverse supply chain logistics, whereas the cost of transaction within each member in the mode was not taken into account. ...
To face the reality of resources exhaustion, the significance of recycling and remanufacturing in the closed-loop chain has become quite evident. This paper constructs a competitive recycling and remanufacturing model of the closed-loop supply chain through a case study of Midea Corp. and Gree Corp. and explores the impact of two recycling modes on total revenue of the supply chain and market share. The simulation results show that the total revenue of the supply chain will benefit from the increasing coverage points by the third party and the increasing environmental awareness of certain regions. The retailers show more enthusiasm of recycling through certain amendment of the contract between manufacturers and retailers. The time of payment could be shortened in closed loop. Moreover, the improvement of recycling mechanism of the retailers can enlarge the share of supply chain market. Guiding role of the proposed model and the simulation results played in establishing a better supply chain mode is presented.
... The quality level k of each core is uncertain, and we assume that a random variable K follows a multinomial distribution with probability P i (core of quality i, i = 1, 2, ...). The assumption is appropriate when the quality values of cores in an acquired lot are independent, which is often the case for remanufacturing [37]. ...
The intensive shortage of natural resources and the inchoate phase of automobile remanufacturing in a closed-loop supply chain (CLSC) are driving people to take cyclic manufacturing seriously. Aiming at maximizing resource utilization and produce profits, we apply an optimizing mathematical analysis to the modeling of automobile engine remanufacturing in a joint manufacturing system, in which the quantity and quality of procurement, and the demand of the market, are both uncertain. The manufacturer can either produce new products with raw materials or remanufacture the returned product taken back from customers; the raw materials are bought from two suppliers with certain probabilities of disruption in the supply. The returned products are classified into different quality levels according to the testing results after sorting, by considering the remanufacture-up-to strategy we obtained the optimal remanufacturing ratio, then the manufacturing quantity and corresponding maximized total profit of this joint system are determined. We also investigated a real-life case of auto engine remanufacturing, comparing it with the theory of optimal remanufacturing policy, and the results indicate that a material savings of more than 45% and a cost improvement of more than 40% could be achieved when the optimal remanufacturing policy of our model is implemented.
... In the steady-state model, we assume products have a useful life of one period, with all new units available thereafter for collection. However, every item collected may not be suitable for remanufacturing due to wear and tear (Ferrer and Swaminathan 2010, Karaer and Lee 2007, Subramanian et al. 2013, thus only a fraction h 2 [0, 1] of the collected volume is viable for remanufacturing regardless of collector. We call h the collection yield, which is usually self-reported and might require verification in practice. ...
As waste from used electronic products grows steadily, manufacturers face take-back regulations mandating its collection and proper treatment through recycling or remanufacturing. Environmentalists greet such regulation with enthusiasm, but its effect on remanufacturing activity and industry competition remains unclear. We research these questions using a stylized model with an original equipment manufacturer (OEM) facing competition from an independent remanufacturer (IR). We examine the effects of regulation on three key factors: remanufacturing levels, consumer surplus, and the OEM profit. First, we find that total OEM remanufacturing actually may decrease under high collection and/or reuse targets, meaning more stringent targets do not imply more remanufacturing. Consumer surplus and the OEM profit, meanwhile, may increase when OEM-IR competition exists in a regulated market. Finally, through a numerical study, we investigate how total welfare changes in the collection target, what happens when the cost of collection is not linear, and what happens when IR products are valued differently by consumers. This article is protected by copyright. All rights reserved.
... He thinks that controlling remanufacturing levels and adjusting remanufacturing costs could minimize the production costs. Based on the three methods of recycling (abandon, re-sale and re-manufacture), Karaer (2007) studies the manufacturers' inventory model about recycling products. Majumder (2001) builds a twoperiod model of remanufacturing in the face of competition between the original equipment manufacturer (OEM) and local remanufacturer (L). ...
... Heese [2007] considers RFID as a means to avoid inventory inaccuracies and determines the cost thresholds at which RFID adoption becomes profitable. Karaer and Lee [2007] analyze a reverse channel problem that considers the possibility of return information, data which becomes visible to the manufacturer due to the use of RFID. ...
Diese Dissertation beschäftigt sich mit den Auswirkungen der Radiofrequenzidentifikation (RFID) auf das Lieferkettenmanagement. Wir entwickeln mehrere ökonomische Modelle zur quantitativen Evaluation der RFID-Technologie und den strategischen Implikationen ihres unternehmensübergreifenden Einsatzes. Dabei wenden wir uns insbesondere folgenden Forschungsfragen zu: (i) Welcher ökonomische Wert kann durch den Einsatz von RFID entlang der Lieferkette realisiert werden? (ii) Welche ökonomische Anreize haben die Teilnehmer von Lieferketten, RFID gemeinsam zu nutzen? (iii) Welche innovativen Praktiken im Bereich des Lieferkettenmanagements wird RFID ermöglichen und was ist der jeweilige Nutzen? Im Gegensatz zu früheren Untersuchungen konzentrieren wir uns auf die Bestimmung des Informations- bzw. Transformationsnutzens von RFID auf der Einzelteilebene in der Lieferkette bestimmter Konsumgüter. Das erste Kapitel der Dissertation enthält die notwendigen Hintergründe über die Möglichkeiten der RFID Technologie und ihr erwarteter Einfluss auf das Lieferkettenmanagement. Das zweite Kapitel untersucht die strategischen Konsequenzen der Möglichkeit, den Güterfluss in Lieferketten auf der Einzelteilebene zu überwachen. Im dritten Kapitel veranschaulichen wir den Wert der durch RFID ermöglichten Sichtbarkeit von Produkten in Einzelhandelsfilialen wenn die logistischen Prozesse durch verschiedene Fehlerarten, speziell Fehlplatzierungen, Schwund und Transaktionsfehler, beeinflusst werden. Im vierten Kapitel quantifizieren wir den Wert von Bestandsreallokationen zwischen Einzelhandelsfilialen – eine Praktik, die durch den Einsatz von RFID auf der Einzelteilebene ermöglicht werden könnte. Das fünfte Kapitel beschäftigt sich mit der Rolle des Austauschs von Logistikinformationen im Kontext der Vorwärtsintegration. Kapitel sechs beschließt die Dissertation und bietet Hinweise für weitere Forschungsvorhaben im Bereich des Wertes von RFID und entsprechender Einführungsstrategien an.
... Karaer and Lee [76] focus on the value of inventory visibility obtained through RFID technologies in the reverse channel management. They analyze the coordination of the reverse and forward chain at the distribution center of a manufacturer. ...
In the last few years, RFID technologies have drawn considerable interests as one of the possible solutions to overcome these supply chain problems. However, integrating these technologies in supply chains induces large costs. Thus, companies must evaluate the impacts of RFID technologies on supply chain performances and economics, in order to decide whether these technologies should be integrated or not.In this thesis we focus on modeling and analyzing the impacts of introducing RFID technologies in supply chain. We first provided a basic knowledge of RFID technologies that includes the working process, the challenges and the obstacles of applying RFID technologies in supply chains. We then reviewed the literature and discussed the challenges and benefits related to integrating RFID in supply chains. Finally, we developed analytical and simulation approaches to evaluate qualitative and quantitative impacts of RFID technologies on supply chain performances and profits. We also developed ROI (Return On Investment) analysis, to compare the benefits obtained by RFID technologies with the costs associated to the integration of these technologies. Furthermore, we focused on how the benefits of RFID technologies can be improved by re-engineering supply chains using the characteristics of RFID technologies. Results obtained in this thesis highlight interesting perspectives for future studies. The main originality of this study is to compare the impacts of integrating different RFID technologies to supply chains by just replacing current identification technologies and by re-engineering supply chains using the new possibilities provided by RFID technologies. Our simulation can also be used as a decision support tool by companies that integrate RFID technologies.
... Some studies investigate six sigma and lean focused RFID enabled supply chains (Brintrup, Ranasinghe, and McFarlane 2010;Chen, Cheng, and Huang 2012). RFID is also valuable in the reverse supply chain where goods are returned for reuse, recycling, remanufacturing and disposal (Karaer and Lee 2007). In warehouse operations, RFID enables innovative processes and improves the real time control (Wamba and Chatfield 2011). ...
Radio Frequency Identification (RFID) is a technology used for identification of objects and information transfer from a distance though radio waves. Different types of RFID tags are used for different applications. Application areas include material handling, supply chain management, manufacturing, product lifecycle management, and a wide range of different systems from healthcare to sports. Object identification standards enable tracking an object in the global range. Although the number of firms adopting RFID technology is continuously increasing, there are still some unresolved issues with RFID systems such as concerns of data reliability, security, privacy, and justification of return on investment. This paper reviews the recent literature on RFID technology, production area applications and issues, and clarifies the future research directions.
... While RFIDs have been widely used in retail (Karaer and Lee 2007) and assembly environments (Gaukler and Hausman 2008;Gaukler and Seifert 2007), there is a growing body of work examining their use in obtaining lead-time information that can help model and adapt to supply-chain uncertainties (Kouvelis and Li 2008;Burke, Carrillo, and Vakharia 2009). Walmart is an example of a company that is beginning to employ similar approaches that combine RFIDs, IT advances, data mining, low-cost sensors, and robotics to track items in the supply chain and obtain continuous feedback (Bonvillian 2011). ...
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... While RFIDs have been widely used in retail (Karaer and Lee 2007) and assembly environments (Gaukler and Hausman 2008;Gaukler and Seifert 2007), there is a growing body of work examining their use in obtaining lead-time information that can help model and adapt to supply-chain uncertainties (Kouvelis and Li 2008;Burke, Carrillo, and Vakharia 2009). Walmart is an example of a company that is beginning to employ similar approaches that combine RFIDs, IT advances, data mining, low-cost sensors, and robotics to track items in the supply chain and obtain continuous feedback (Bonvillian 2011). ...
Manufacturing is on the verge of entering a new frontier that has the potential to revolutionize every facet of society as we know it. Innovative processes, trends, and technologies are transforming the core of manufacturing, and lowering the walls between manufacturing and other sectors of the economy, especially the services sector. Due to the expected impact of this transformation, policymakers, business leaders, and society as a whole will have to adjust their image of manufacturing to this new reality.
In this article, we build on our recent investigations into this transformation and provide insights into the future of manufacturing and its impact on policy, business, and society.1 Our starting premise is that policymakers and business leaders must come to terms with two developments. The first is that the factory floor—traditionally considered the essence of the manufacturing sector—is an increasingly smaller and more integrated piece of a larger manufacturing enterprise that comprises other traditionally distinct sectors, such as research and development (R&D) in industry and academia, design, consulting services, sales, and marketing. The second development is that, because of this integration, manufacturing can no longer be treated as an expendable, stand-alone puzzle piece that can be cut out and exported as needed. Nor can the manufacturing challenge be addressed without considering other business or economic factors, as many current initiatives are attempting to do.
The transformation of manufacturing has been underway for decades. Early signs included the migration of firms toward a combination of manufacturing and support services that integrated manufacturing into the tangible and intangible economies. Decades ago, firms like IBM and Xerox bundled their manufactured products with support services to differentiate their products, build strong relationships with consumers, and increase profit margins. Most recently, Apple blurred the manufacturing/services distinction with the integration of their iPad, iPod, and iPhone products with online services. As manufacturers have moved into services, the service industry has moved toward manufacturing: Microsoft, a software company, also offers computer peripherals such as trackballs and keyboards; Amazon, originally an online bookseller, also builds and sells the Kindle electronic reader; and the British firm Riversimple plans to manufacture hydrogen fuel cell cars and lease them on a per-use basis.
This trend has moved beyond linking support services with manufactured products and is now fully integrating services with products, such that the two become inseparable. Even medicine, the most craft-like of professions, is becoming a blend of human medical skill and manufactured technology. Hardware- and software-based medical tools are used in routine diagnostics and patient care, and increasingly in complex surgery. Innovations in wireless sensing technology—a stronghold of the manufacturing sector—have great potential in the field of personalized medicine. Future advances in tissue engineering could make it possible to grow organs using three-dimensional printing technologies, which would significantly change the boundaries between traditional manufacturing and biotechnology. By creating opportunities for entrepreneurs and companies of all sizes in all sectors of the economy, such advances in manufacturing have the potential to broadly distribute, rather than to concentrate, economic opportunity.
Traditional factories were designed to efficiently produce thousands of identical widgets—what MIT’s Sanjay Sarma has called “the tyranny of bulk.” Today’s advanced manufacturing facilities produce low-cost goods with the efficiency of mass production and the flexibility of custom manufacturing, which allows companies to respond quickly to changes in quantity, quality, and customer demands, thus giving consumers the speed, flexibility, and customization they increasingly expect. Moreover, these advances increasingly generate spillover into sustainability and lower use of resources, which serves the common good while adding to the company’s bottom line.
In this policy perspective, we examine the advanced manufacturing enterprise of the future through a lens of four cross-cutting technology areas. We identify converging trends, where the ubiquitous use of information technologies, modeling and simulation, and supply-chain innovations are leading to nearly full automation of the factory floor, and where smart factories are being created that have the ability to respond rapidly to changes in customer demand. We then describe the current global players in these technology areas, and conclude with a discussion of the science and technology advances and policies needed to...
The rapid growth of online marketplaces and the advance of Internet technology have enabled manufacturers to more easily engage in direct selling through their own online stores. However, as any retail channel suffers misplacements, the manufacturer's direct sales channel will also face a critical inventory misplacement problem if it chooses encroachment. Radio-frequency identification (RFID) proven to be the most effective technology to eliminate the inventory misplacement problem. This paper investigates the strategic interaction between manufacturer encroachment and RFID deployment decisions in a supply chain consisting of a manufacturer and a reseller. We find that the manufacturers’ encroachment strategies are determined by channels’ misplacement rates, RFID deployment decisions and channel competition intensity. Specifically, the retail (direct) channel's misplacement problem encourages (discourages) the manufacturer to encroach; in addition, if only the retail (if it is direct) channel employs RFID, the encroachment cost threshold increases (decreases) with the RFID tag price; moreover, the more intense the channel competition is, the less likely the manufacturer will be to encroach. Further, when encroachment has occurred, channel competition will be a crucial factor in the direct channel's RFID deployment decision, but it will not affect the deployment of RFID in the retail channel.
Many countries have imposed product take-back conditions on their manufacturers, as part of the commitment to the extended product responsibility. This paper explores the feasibility of the take-back regulation operating under a collection target and a reuse target. Two models using different regulation setups are developed to show the effects of a take-back regulation on consumer surplus, the benefits to the supply chain, and social welfare. The results suggest that the optimal strategies of the manufacturer depend on the regulation model applied. Setting higher regulation targets decreases the manufacturer’s profit, but the chain benefits from the reuse target. To achieve a high collection rate and reuse efficiency, policy makers should set a high collection target and a high reuse target. To improve the social welfare, a low collection target and a high reuse target should be set. This study provides some suggestions for the manufacturer to cope with regulation targets and offers some guidelines for policy makers to set and implement the regulation targets.
Logistics is an integral part of the supply chain. Many logistics service providers have acknowledged that if they want to operate more efficiently and responsively, they must adopt technologies that help manufacturers, warehouses, and retailers to communicate with each other more efficiently. Radio Frequency Identification (RFID) technology has been identified as an important application among many logistics technologies and is increasingly gaining both practitioners' and researchers' attention. The purpose of this chapter is to explore the factors affecting logistics service providers' intentions to use RFID technology, with special emphasis on its environmentally friendly green characteristics. The theoretical perspective diffusion of innovations is used for the purpose. The data is collected using a questionnaire survey among the UK logistics companies. The analysis shows that observability of green characteristics positively influences the intention to use RFID.
This chapter examines the used products return service quality perceived by the end users and their corresponding willingness-to-return with respect to the used products in their possession. The chapter starts with an introduction about the issue of return quantity encountered at the used product collection stage. Then, related studies dealing with returns quantity are discussed in the background section. Next, the focal problem of this chapter is stated in the problem statement section. A detailed description about the approach (i.e., agent-based modelling and simulation) can be found in the proposed methodology section. Right after this, three simulations, with each one linked to a specific used products return scenario, are conducted in the experimental study section. The potential research directions regarding the main problem considered in this chapter are highlighted in the future trends section. Finally, the conclusion drawn in the last section closes this chapter.
This research examines the demand-dependent product recovery decision-making problem for a batch of products that undergo remanufacturing/dismantling via a hybrid recovery system. Product recovery provides an attractive approach to achieving sustainable manufacturing. Faced with changing demand, flexible recovery decisions on product recovery strategies, component recovery options, and recovery yields are critical to enable a successful and sustainable operations. However, a need exists for an integrated model to provide a comprehensive optimal solution from the integrated perspective of economic, environmental, and societal sustainability. This research gap is addressed by proposing and validating a multi-objective decision-making model. Demand-dependent optimal solutions are identified that balance different sustainable performance constraints. Further, a two-stage meta-heuristic method is developed to solve the model, where a cooperative evolution mechanism is designed to optimize dismantling decisions and recovery yields simultaneously. Numerical experiments are conducted that illustrate and validate the developed solution. In addition, the impacts of demand on optimal decisions and different sustainable performance are investigated. The results verify the effectiveness of our new model and approach in assisting decision makers in finding a flexible path to sustainable recovery while providing insights into analyzing the counteraction effect of different demands in hybrid recovery implementation.
This paper measures the worst‐case efficiency of price‐only contracts in closed‐loop supply chains (CLSCs) with the price of anarchy (PoA). We model a single‐period Stackelberg game in which a manufacturer sells new products to a retailer and collects used products with exogenous retail price and collection price via three alternative reverse channels: (a) the manufacturer collects directly from customers, (b) the retailer collects for the manufacturer, and (c) a third party is awarded a collection subcontract from the manufacturer. We carry out a comprehensive investigation under push–pull configurations to observe how reverse channel structures with different gaming sequences of CLSC members influence the worst‐case performance when the demand distribution is over the set of increasing generalized failure rate distributions. From our PoA analysis, we find that the pull system does not always outperform the push system, especially when the retailer is the leader, in contrast to the results for forward supply chains. While the PoA of the push system is dramatically sensitive to the quality condition of used products, the pull system has a constant efficiency loss that is independent of the quality condition. Instead, the PoA of the pull system solely changes with the gaming sequence of the manufacturer. We also find that manufacturer's direct collection is a better reverse channel choice compared to retailer's collection. Additional managerial insights are summarized for discussion.
When a product enters the end phase of its life cycle, certain parts become obsolete and their supply is discontinued permanently. However, the manufacturer must still maintain sufficient inventory to satisfy customer warranty claims in the future. We study the spare parts inventory control problem under such a setting, where remanufacturing parts from product returns is adopted as the main approach to ensure sufficient supply. One novel feature of our model is the interrelationships among the installed base, product returns, and demand for spare parts, which lead to the endogeneity of demand. Specifically, we formulate stochastic dynamic programs for two scenarios, in which a firm either utilizes phase-out returns or proactively collects products. For the former scenario, we establish the optimality of a modified-base stock policy, and find that the inventory control target increases with the installed base size and part failure rate. For the latter scenario, we discover that a return-dependent base stock policy is optimal and conduct comparative static analyses for the acquisition and remanufacturing decisions, where their one-sided limited sensitivities in state variables (initial parts inventory and installed base size) are identified in a stationary environment. These findings are largely attributed the novel model with endogenous spare parts demand. Through extensive numerical studies, we investigate the benefits introduced by acquiring returns under a range of parameter settings. It is found that when the mismatch between warranty demand and part supply is higher, firms can enjoy more significant cost savings. Finally, the potential monetary loss when the relationships among the installed base, demand, and product returns are ignored is examined computationally. The extra cost incurred is significant and becomes higher when proactive acquisition is adopted.
Remanufacturing operations rely upon accurate forecasts of demand and returned items. Return timing and quantity forecasts help estimate net demand (demand minus returns) requirements. Based on a unique data set of serialized transactional issues and returns from the Excelitas Group and one of their defense contractors, Qioptiq, we assess the empirical performance of some key methods in the area of returns forecasting. We extend their application (for net demand forecasting), by considering that demand is also subject to uncertainty and thus needs to be forecast. Information on remanufacturing costs allows for an evaluation of the inventory implications of such forecasts under various settings. A foray into the literature on information technologies enables a discussion on the interface between information availability and forecast accuracy and utility. We find that serialization accounts for considerable forecast accuracy benefits, and that the accuracy of demand forecasts is as important as that of returns. Further, we show how the combined returns and demand forecast uncertainty affects the inventory performance. Finally, we identify opportunities for further improvements for the operations of Qioptiq, and for remanufacturing operations in general.
Closed-loop supply chains (CLSC) deal with integrating product returns into the total supply chain over the lifecycle of the product, thereby recovering a maximum amount of value. In this chapter, the CLSC is studied through quantitative models at three levels. The study at the first level analyses a generic closed loop strategic framework under various scenarios, capturing the implementation maturity of CLSC. In the second level, a quantitative model for multi stage integrated forward and reverse logistics network is analyzed. Finally in the third level of study, a microscopic view is taken in which a joint economic order quantity (EOQ) and economic production quantity (EPQ) model is studied to optimize value by using proper mix of newly purchased components /products with recycled components /products. The final control parameters may be utilized by policy makers, CLSC network designers or practicing managers for effective decision making and coordination.
Owing to the quality heterogeneity of returned used products, firms engaged in re-manufacturing activities are obliged to employ 100 % inspection of these products to evaluate their quality and suitability for re-manufacturing. In addition to visual inspection, a recent tendency is to use data recorded in electronic devices (e.g., radio frequency identification (RFID)) implanted in the products. In this way, information is obtained quickly without the need for complete (and expensive) product disassembly. Nevertheless, making sense of RFID data in a complex cyber physical system (CPS) environment (which involves such as cloud computing for used product life cycle information retrieval and physically used products scanning) is a complex task. For instance, if an RFID readers fails, there may be missing values exist. The purpose of this chapter is to employ two computational intelligence (CI) optimization methods which can improve the reliability of such inspection process.
This paper presents a systematic literature review of papers that were published in academic journals on the applications of radio frequency identification (RFID) in supply chain management between the years 2000 and 2015. As the literature on RFID is not confined to specific disciplines or repositories, this paper proposes a discipline-based framework for classifying RFID literature. Five main classification categories are used in this paper: technology, supply chain management, research methodology, application industries, and social aspects. The paper then focuses on the category of supply chain management and reviews 1187 articles that were published between 2000 and 2015 in rated journals. All the papers reviewed are further classified into eight subclasses under this category of supply chain management. The review yields useful insights into the anatomy of RFID literature in supply chain management, enhances evidence-based knowledge, and contributes to informing practice, policymaking and future research. The review reveals that even presently, despite technical and cost challenges, enormous potential exists for the application of RFID in several areas of supply chain management and the prospects are likely to grow into the future. Since RFID solutions have emerged primarily over only the past 20 years, significant research opportunities exist and would need to be addressed to continue to support the technology’s maturation, evaluation, adoption, implementation, and diffusion.
Logistics is an integral part of the supply chain. Many logistics service providers have acknowledged that if they want to operate more efficiently and responsively, they must adopt technologies that help manufacturers, warehouses, and retailers to communicate with each other more efficiently. Radio Frequency Identification (RFID) technology has been identified as an important application among many logistics technologies and is increasingly gaining both practitioners' and researchers' attention. The purpose of this chapter is to explore the factors affecting logistics service providers' intentions to use RFID technology, with special emphasis on its environmentally friendly green characteristics. The theoretical perspective diffusion of innovations is used for the purpose. The data is collected using a questionnaire survey among the UK logistics companies. The analysis shows that observability of green characteristics positively influences the intention to use RFID.
The paper deals with modeling and simulation of business processes. A multiagent system was implemented as a tool to manage the simulation. Multiagent systems often operate with random (respectively pseudorandom) generated parameters in order to represent unpredictable phenomena. The aiml of the paper is to show the influence of different random number generation functions to the real multiagent system outputs. It is obvious, that outputs of the multiagent system simulation differs from turn to turn, but the motivation was to find, if the differences are significant. An accurate number of agents with the same parameters were used for each case, with different kinds of randomness while generating agent’s internal state attributes. The results obtained show that using inappropriate random number generation function leads to significant output data distortion, so the generation function selection must be done very carefully.
The pharmaceutical industry is one of the most complex and life-critical sectors in all business fields. Because of this essential characteristic, the importance of supply chain visibility in operations processes and management of the pharmaceutical industry cannot be underestimated. It is understood that radio frequency identification (RFID) provides timely, accurate, and reliable information that contributes to improving traceability within pharmaceutical supply chains (PSC), which may increase both operational efficiency and customer safety in drug flow. This paper identifies four major factors that constitute efficient pharmaceutical supply chain management (PSCM), and investigates correlations among them. The four factors are traceability, safety, security, and inventory and warehouse management (I&W M). In order to demonstrate the holistic picture of PSCM, this study develops a conceptual structure model in which the implementation of RFID affects me efficiency of PSCM both directly and indirectly. Data collected from 194 professionals in the PSC industry was analyzed using structural equation modeling. The results show that PSC with high levels of security and I&W M due to RFID systems directly affect the increase of efficiency of pharmaceutical supply chain management (EPSCM), while PSC with high levels of traceability and safety due to RFID systems indirectly affect the increase of EPSCM via omer factors. This research extends the academic efforts of previous research to suggest safety and security effects featured in PSCM, and indicates the practical advantages of RFID implementation for PSC stakeholders, including the increase of operational efficiency and patient safety.
To overcome the deficiencies of the past literatures to describe the function of recovery quantity, it was necessary to construct a new function, in which recovery quantity connected with buy-back price and sale quantity. At this background, this paper analyzed the optimal decision of the manufacturer in the reverse supply chain in a remanufacturing closed-loop supply chain consisting of a manufacturer and competing retailers under three cases: two retailers participated in recycle, one retailer participated in recycle and the manufacturer collected directly. The results show that: when the cost saving is large enough, the manufacturer tends to collect used products in the consumer market through the competing retailers. Otherwise, when the cost saving is not large enough, the manufacturer collects herself or chooses one of the competing retailers to collect the used products, which depends on the market size, the attract coefficient and the switching coefficient. Moreover, the improvement of the consumers' environmental awareness is beneficial to the manufacturer, consumers and social environment. The results of the paper provide a basis for the manufacturer on her choice of channel selection.
Owing to the quality heterogeneity of returned used products, firms engaged in re-manufacturing activities are obliged to employ 100 % inspection of these products to evaluate their quality and suitability for re-manufacturing. In addition to visual inspection, a recent tendency is to use data recorded in electronic devices (e.g., radio frequency identification (RFID)) implanted in the products. In this way, information is obtained quickly without the need for complete (and expensive) product disassembly. Nevertheless, making sense of RFID data in a complex cyber physical system (CPS) environment (which involves such as cloud computing for used product life cycle information retrieval and physically used products scanning) is a complex task. For instance, if an RFID readers fails, there may be missing values exist. The purpose of this chapter is to employ two computational intelligence (CI) optimization methods which can improve the reliability of such inspection process.
In distribution centres, usability of an automated guided vehicle depends on the accuracy of its positioning system. In manufacturing industries and global supply chains, one of the biggest operational costs is to manage movement of goods and materials within the distribution centres. This type of goods movement involves numerous trips. A wide variety of technologies have been proposed but there are still issues in terms of cost, accuracy, line of sight, and site support. Toovercome these issues, the inclusion ofradio frequency identification (RFID) transponders as a location data source has been found to be promising. The advantage of an RFID system is that it can read a large number of transponders without simultaneous line of sight of the transponders. This paper describes a low-cost, highly flexible two-dimensional positioning system using an RFID array. A large number of experiments are performed and the position of an object is computed by the weighted average method. The effectiveness of different weighting functions for calculating the localized positions using RFID data from the array is evaluated. Preliminary experimentation shows that this system is capable of locating an object with an average accuracy of 67mm, using an array with a 350mm spacing between tags.
Based on environmental, legal, social, and economic factors, reverse logistics and closed-loop supply chain issues have attracted attention among both academia and practitioners. This attention is evident by the vast number of publications in scientific journals which have been published in recent years. Hence, a comprehensive literature review of recent and state-of-the-art papers is vital to draw a framework of the past, and to shed light on future directions. The aim of this paper is to review recently published papers in reverse logistic and closed-loop supply chain in scientific journals. A total of 382 papers published between January 2007 and March 2013 are selected and reviewed. The papers are then analyzed and categorized to construct a useful foundation of past research. Finally, gaps in the literature are identified to clarify and to suggest future research opportunities.
A major priority for large retailers is ensuring that items are on the shelf in sufficient quantities to satisfy all customer demand. In recent years, there has been much interest in the use of radio frequency identification (RFID) technology to track items throughout the supply chain, and in particular, for providing precise and timely shelf level inventory information. We develop a detailed simulation model to study the impact of using RFID for shelf replenishment at a retail facility. The model evaluates scenarios with and without RFID to understand the relative gains, which can then be used to evaluate relevant economic trade-offs.
This paper develops a model to predict the adoption and level of usage of network technology in a two-level supply chain with buyer-supplier relationships. A firm's adoption of a new technology depends not only on its own beliefs of the new technology's costs and benefits, but also on the adoption decisions of other firms in the supply chain. A model first analyzes an individual supplier's decision about a new technology adoption considering with multiple suppliers and buyers. Individual suppliers' decisions are aggregated with a population model to project how new technology diffuses across the supply chain and examine the pattern of diffusion process. This study found that as more firms adopt in initial periods, the total amount of information to the potential adopters in the population increases, and then the number of firms persuaded by the information increases as the process moves up the distribution of adoption process. We consider three factors influencing the diffusion speed of the new technology in a supply chain network : mean benefits, cost sharing, and information provision. This study examines how such factors affect the reduction of threshold levels, which implies that reductions in threshold levels have an aggregate effect by accelerating the rate of adoption. In particular, we explore relationship factors available in practice in a buyer-supplier relationship and numerically examines how these relationship factors contribute to increase the diffusion speed of the technology in a two-level supply chain.
Good organization of reverse logistics channels allows company to explore the additional value from extended life cycle of products. In order to be able to effectively plan flow of returns in recovery network a big number of data is needed. Moreover the exchange of information between the cooperating companies must be done in time efficient manner. The aim of this paper is to present a framework for information management among companies within recovery network. The recovery network for electronic equipment will be used as an example for theoretical considerations. The key factors and obstacles for coordination of recovery network will be identified. The requirements for integration platform functionality will be presented.
Purpose
– The purpose of this paper is to identify the key issues faced by today's supply chain professionals when managing reverse logistics (RL) processes and compare these issues with the topics examined in extant research. By making such a comparison, the paper identifies areas of practical relevance that are being adequately addressed in the literature, as well as areas that may need further attention.
Design/methodology/approach
– The paper employed a Delphi method in order to uncover the most salient RL issues faced in industry, as viewed by practitioners. The paper then completed a systematic analysis of the RL literature in order to examine the degree to which topics addressed in the extant literature correspond with the framework proposed by Carter and Ellram (1998). Finally, the paper compared and contrasted the findings of the content analysis and Delphi study, which highlights areas for future investigation that may help to better align research with practice.
Findings
– In the Delphi study, the paper uncovered and ranked seven key issues for RL managers. These are: customer support, top-management support, communication, costs, formalization, timing of operations, and environmental issues. When compared to Carter and Ellram's (1998) framework, three of the seven factors coincide with factors described in the framework and two factors indirectly relate to the framework. The two factors not specifically represented are costs and formalization.
Practical implications
– The findings provide practitioners with an understanding of what factors are most important to consider when managing RL programs. The discussion of the comparison between the Delphi results and extant literature provides guidance as to how to address the RL issues uncovered in this study.
Originality/value
– This research effort suggests directions for future research that will better align academic topics with current managerial issues. Although the paper offers many suggestions for future research, the paper proposes that investigating ways to increase formalization of RL programs and establish RL as a profit center within organizations may be the areas in greatest need for additional scholarly research.
The value of information (VoI) is a decision analytic method for quantifying the potential benefit of additional information in the face of uncertainty. This paper reviews the prevalence of VoI applications reported in the peer-reviewed literature from the years 1990–2011. We categorize papers’ applications across the types of uncertainties considered, modeling choices, and contexts of social importance (such as health care and environmental science). We obtain and analyze statistics on the range of applications and identify trends and patterns in them, and conclude with an interpretation of what these mean for researchers and practitioners as they pursue new efforts. Key results include a substantial increase over the last 20 years in published papers utilizing VoI, particularly in the medical field. Nineteen trends in VoI applications from the period of 1990–2000 to 2001–2011 were found to be at least weakly significant. Beyond simple trends, some characteristics of VoI usage depend on the area of application, and in some cases, certain sets of characteristics tend to be found together.
This article sheds light on the role of information systems in product recovery management. We first develop analytical models and then provide a numerical example to determine under what conditions investments in Information-intensive Product Recovery Systems (IPRS) are economically justifiable for manufacturers and when policy-makers need to consider facilitating their implementation. The results of the analytical models indicate that the recovery network (collection) structure and product characteristics determine if precision improvements or increased sorting speed associated with IS investments will lead to higher profit gains. Manufacturers should carefully assess conflicting impacts of current manufacturing and recycling technology trends on the value of IPRS. Implementing IPRS might end up reducing manufacturers' profits under a highly time efficient decentralised collection structure. We show that negotiations with competitors about IPRS implementation may lead to a win–win situation and allow consumers to enjoy the lowest product price if the binding force of the agreement is strong. Otherwise, some manufacturers follow free-rider strategies. This article has immediate application to manufacturers' IS strategy and to government policy-makers considering investing in and/or structuring product recovery closed-loop supply chain processes within their jurisdictions. It also opens a potential stream of research concerning the role of IPRS to automate, informate and transform closed-loop supply chains for eco-efficiency.
Radio frequency identification (RFID) is an emerging technology that is increasingly being used in supply chain management. RFID technology plays an important role in supporting logistics and supply chain processes because of their ability to identify, trace and track information throughout the supply chain. The technology can provide suppliers, manufacturers, distributors and retailers precise real time information about the products. This accurate knowledge of the inventory would result in lower labor cost, simplified business processes and improved supply chain efficiency. If properly used, it has the potential to cut ordering lead time and cost on inventory control, increase the accuracy of inventory information, help avoid stockouts and boost the number of inventory turns. In this paper, we provide an overview of the current state of RFID applications in different industries and its impact on business operations. We provide extensive literature survey and develop a framework for future research areas in this field.
Purpose
The purpose of this paper is to assess the value of radio‐frequency identification (RFID) and sensor technologies to reverse logistics processes. The research is motivated by the question of to what extent the accuracy of information on product quality delivered by such technologies impacts the total recovered value that companies obtain from returned goods in an industry with time‐sensitive products.
Design/methodology/approach
The paper first presents a case study to examine the returns management process at a manufacturer of high‐tech consumer electronics. It then develops an analytical model to study the monetary benefits in a scenario with RFID‐enabled product disposition.
Findings
The results show that RFID allows for a redesign of the return process that performs more efficiently regarding the total recovered value depending on technology costs (i.e. tag costs) and capabilities (i.e. sufficient sensor‐delivered parameters to rightly infer product quality). Second, the results indicate that maximum benefits can be drawn with lower accuracy but early decision on the disposition option.
Originality/value
This paper compares traditional and RFID‐enabled returns management processes. It provides a model to quantitatively investigate whether RFID and sensor implementation is a feasible and economically viable approach.
The flow of product returns is becoming a significant concern for manufacturers. Typically, these returns have been viewed as a nuisance, resulting in reverse supply chains that are designed to minimize costs. These minimum cost reverse supply chains often do not consider product return speed. The longer it takes to retrieve a returned product, the lower the chances that there are financially attractive reuse options. Unlike forward supply chains, design strategies for reverse supply chains are unexplored and largely undocumented. The most influential product characteristic for reverse supply chain design is the marginal value of time. Responsive reverse supply chains are the appropriate choice when the marginal value of time for products is high, and efficient reverse supply chains are the proper choice when the marginal value of time for products is low. Product returns and their reverse supply chains represent a potential value stream and deserve as much attention as forward supply chains.
Information and Communication Technology can help companies realize new innovative business opportunities in the area of closed-loop supply chains. This article examines closed-loop supply chains from three perspectives: processes, customers, and products. Exploiting the possibilities of closed-loop supply chains involves handling uncertainties by providing adequate information. Information on recovery options for a product, product preferences of the customer, and the state of the product can be used to reduce uncertainty. Data that is retrieved from the closed-loop supply chain by new technologies can be transformed into management information in a systematic way. This article presents a framework to address uncertainty reduction strategies.
Remanufacturing facilities usually face a trade-off between limited information about remanufacturing yields and potentially long supplier lead times. To improve production performance, these firms may attempt to acquire more timely and accurate information about remanufacturing yields or alternatively, to reduce the lead times of purchased parts. We develop four decision-making models to evaluate the impact of yield information and supplier lead time on manufacturing costs. We identify the operating conditions under which these capabilities are valuable, along with their relative impact on facility performance. Each model is formulated as an infinite horizon, stochastic dynamic program (Markov decision process). Our results indicate that the yield information is generally quite valuable, while investments in supplier responsiveness provide trivial returns to products with few parts. However, as product complexity increases with large number of target parts, the value of short lead times increases.
Today many companies rely on computerized tracking of inventory. Although computerized inventory tracking is generally assumed to be accurate, in reality, actual on-hand inventory deviates from the inventory record, which distorts the replenishment process and compromises good inventory management. Discrepancy between the inventory record and physical stock has mainly three sources: shrinkage, misplacement and transaction errors. Due to these factors, the actual stock levels are not known with certainty. Therefore, the system fails to order when it should or it carries more inventory than necessary. Periodic inventory audits are the most common approach to maintaining inventory record accuracy. In this paper, we consider a finite horizon, single-item periodic review inventory control problem in which inventory records are inaccurate. Inventory errors accumulate until an inventory count is conducted. After the inventory count, the inventory record is reconciled: error is corrected and all misplaced items are returned to inventory. We explicitly model how different error sources lead to inventory discrepancies. First we determine effective replenishment policies that use information about actual inventory movement and error sources and minimize total expected inventory cost. Next we also determine a replenishment policy that accounts for inventory inaccuracy without having complete visibility to inventory and error sources. By comparing the total cost of using these replenishment policies, we quantify the true value of inventory visibility, as well as the value of elimination or reduction of the sources of inventory discrepancies offered by the latest tracking technologies such as RFID.
False failure returns are products that are returned by consumers to retailers with no functional or cosmetic defect. The cost of a false failure return includes the processing actions of testing, refurbishing (if necessary), repackaging, the loss in value during the time the product spends in the reverse supply chain (a time that can exceed several months for many firms), and the loss in revenue because the product is sold at a discounted price. This cost is significant and is incurred primarily by the manufacturer. Reducing false failure returns, however, requires effort primarily from the retailer, for example informing consumers about the exact product that best fits their needs. We address the problem of reducing false failure returns via supply chain coordination methods. Specifically, we propose a target rebate contract that pays the retailer a specific dollar amount per each unit of false failure returns below a target. This target rebate provides an incentive to the retailer to increase her effort, thus decreasing the number of false failures and (potentially) increasing net sales. We show that this contract is Pareto improving in the majority of cases. Our results also indicate that the profit improvement to both parties, and the supply chain, is substantial.
Customers and downstream supply chain partners often place, or can be induced to place, orders in advance of future requirements. We show how to optimally incorporate advance demand information into periodic-review, multiechelon, inventory systems in series. While the state space for series systems appears to be formidably large, we decompose the problem across locations, as in Clark and Scarf (1960), and reduce the state space at each location by using modified echelon inventory positions (that nets known requirements). We prove the optimality of state-dependent, echelon base-stock policies for finite and infinite horizon problems. We also show that myopic policies are optimal and very easy to compute when costs and demands are stationary. We provide managerial insights into the value of advance demand information through a numerical study.
There is a growing consensus that a portfolio of customers with different demand lead times can lead to higher, more regular revenues and better capacity utilization. Customers with positive demand lead times place orders in advance of their needs, resulting in advance demand information. This gives rise to the problem of finding effective inventory control policies under advance demand information. We show that state-dependent (s, S) and base-stock policies are optimal for stochastic inventory systems with and without fixed costs. The state of the system reflects our knowledge of advance demand information. We also determine conditions under which advance demand information has no operational value. A numerical study allows us to obtain additional insights and to evaluate strategies to induce advance demand information.
ustomers with positive demand lead times place orders in advance of their needs. A portfolio of customers with different demand lead times gives rise to what we call advance demand information. We develop effective inventory policies for a distribution system to account for this information. In particular, we study a centralized system with one ware- house serving multiple retailers under advance demand information. The inventory manager replenishes the warehouse from an outside supplier. Units arriving to the warehouse are allocated to the retailers. To control this system, we develop a lower bound and proposed a close-to-optimal heuristic for which the optimality gap is on average 1� 92%. We also provide a closed-form solution to approximate the system-wide inventory level. Using this explicit solution, the model and the heuristic, we investigate (1) the benefit of advance demand infor- mation, and its impact on allocation decisions, (2) the joint role of risk pooling and advance demand information, and (3) the system performance with respect to supplier and retailer lead times. We illustrate how advance demand information can be a substitute for lead times and inventory, and how it enhances the outcome of delayed differentiation. (Stochastic Inventory Systems; Advance Demand Information; Multi-Echelon; Distribution Systems; Supply Chain Management)
For many companies, inventory record inaccuracy is a major obstacle to achieving operational excellence. In this paper, we consider an inventory system in which inventory records are inaccurate. The manager makes inventory inspection and replenishment decisions at the beginning of each period. There is a cost associated with each inspection. If an inspection is performed, inventory records are aligned with physical inventory. The objective is to develop a joint inspection and replenishment policy that minimizes total costs in a finite horizon. We prove that an inspection adjusted base-stock (IABS) policy is optimal for the single-period problem. In the finite-horizon problem, we show that the IABS policy is near optimal in a numerical study. Under this policy, the manager performs an inspection if the inventory recorded is less than a threshold level, and orders up to a base-stock level that depends on the number of periods since the last inspection. The prevalent approach to deal with inventory inaccuracy in practice is to implement cycle-count programs. Based on the structure of the IABS policy, we propose a new cycle-count policy with state-dependent base-stock levels (CCABS). We show that CCABS is almost as effective as the IABS policy. In addition, we provide guidelines for practitioners to design effective cycle-count programs by conducting sensitivity analyses on the IABS policy. Finally, by comparing the costs associated with these policies and several benchmark systems, we quantify the true value of accurate inventory information, which may be provided by radio-frequency identification (RFID) systems.
We address the procurement of new components for recyclable products in the context of Kodak's single-use camera. The objective is to find an ordering policy that minimizes the total expected procurement, inventory holding, and lost sales cost. Distinguishing characteristics of the system are the uncertainty and unobservability associated with return flows of used cameras. We model the system as a closed queueing network, develop a heuristic procedure for adaptive estimation and control, and illustrate our methods with disguised data from Kodak. Using this framework, we investigate the effects of various system characteristics such as informational structure, procurement delay, demand rate, and length of the product's life cycle.
We incorporate information flow between a supplier and a customer in a two-echelon model that captures the capacitated setting of a typical supply chain. We consider three situations: (1) a traditional model where there is no information to the supplier prior to a demand to him except from past data; (2) the supplier has the information of the (s,S) policy used by the customer as well as the end-product demand distribution; and (3) the supplier has full information about the state of the customer. We show that order up-to policies continue to be optimal for models with information flow for the finite horizon, the infinite horizon discounted and the infinite horizon average cost cases. We develop solution procedures to compute the optimal parameters. Study of these three models enables us to understand the relationships between capacity, inventory and information at the supplier level and how they are affected by customer S Gamma s values and end-item demand distribution. We...
We study an assemble-to-order system with stochastic leadtimes for component replenishment. There are multiple product types, of which orders arrive at the system following batch Poisson processes. Base-stock policies are used to control component inventories. We analyze the system as a set of queues driven by a common, multiclass batch Poisson input, and derive the joint queue-length distribution. The result leads to simple, closed-form expressions of the first two moments, in particular the covariances, which capture the dependence structure of the system. Based on the joint distribution and the moments, we derive easy-to-compute approximations and bounds for the order fulfillment performance measures. We also examine the impact of demand and leadtime variability, and investigate the value of advance demand information.
Closed-loop supply chains (CLSC) have product returns at the center of attention. Our view is that CLSC are best managed from a business perspective where organizations seek to maximize value recovery. The research in the feature issue, and our experiences, shows that there are still numerous, unresolved, managerially relevant issues that deserve further investigation. We also observe that there is a pressing need to validate the assumptions in our models using interdisciplinary, industry-driven research. The time is right for production and operations management to play a central role in the sustainability movement slowly taking hold in practice.
While companies spend much effort on the design, analysis, and management of their forward supply chains, they need to pay the same attention to their reverse supply chain. Pioneering firms have learned that making product returns profitable relies on good design of the reverse chains' business processes, including integration with the forward chain. Product modularity offers new possibilities for supply chain design. Optimal closed-loop supply chain management requires three things. First, the type of return needs to be matched with the appropriate closed-loop supply chain. Second, through modular reuse, optimal value can be regained in closed-loop applications. Third, the value of reuse information may in some cases be higher than the value of the returns themselves.
We consider a serial inventory system with N stages. The material flows from an outside supplier to stage N, then to stage N - 1, etc., and finally to stage 1 where random customer demand arises. Each stage replenishes a stage-specific inventory position according to a stage-specific reorder point/order quantity policy. Two variations of this policy are considered. One is based on echelon stock, and the other installation stock. The former requires centralized demand information, while the latter does not. The relative cost difference between the two policies is called the value of centralized demand information. For fixed order quantities, we develop efficient algorithms for computing both the optimal echelon reorder points and the optimal installation reorder points. These algorithms enable us to conduct an extensive computational study to assess the value of centralized demand information and to understand how this value depends on several key system parameters, i.e., the number of stages, lead times, batch sizes, demand variability, and the desired level of customer service.
The increasing number of returns of products and the items used for their distribution has become an important topic for many companies all over the world due to increasing competition and environmental legislation. Closed-Loop Supply Chains (CLSC) may offer companies a unique opportunity to improve their profits on the one hand and to serve societal responsibility on the other hand. The management of CLSC differs in a number of ways from managing supply chains in general. The book gives insight in these differences and how these differences may be dealt with in practice, by offering a concrete framework, introducing the different aspects related to CLSC (technical, organisational, planning and control, information, environmental and business economic) and their mutual relations, in a systematic logical way as well as cases clustered according to the inputs for a CLSC, like commercial returns, end-of-life returns, where for each case attention is paid to all the above mentioned aspects. The framework and especially the cases from successful companies offer the reader an invaluable help to build up and improve CLSC.
Closed-loop supply chains (CLSC) have product returns at the center of attention. Our view is that CLSC are best managed from a business perspective where organizations seek to maximize value recovery. The research in the feature issue, and our experiences, shows that there are still numerous, unresolved, managerially relevant issues that deserve further investigation. We also observe that there is a pressing need to validate the assumptions in our models using interdisciplinary, industry-driven research. The time is right for production and operations management to play a central role in the sustainability movement slowly taking hold in practice.
The optimum solution structure for an n-period repairable inventory problem is completely defined by three period dependent values: theta //n, the repair-up-to-level; delta //n, the purchase-up-to-level; and theta //n plus xi //n, the scrap-down-to-level. The specific problem examined includes fixed periodic reviews, instantaneous delivery of purchased and repaired units, backlogging of unsatisfied demand, random demand for serviceables, random return of repairables with any relationship being permitted between demand and returns and a convex differentiable cost function. The basic solution methodology is a backward dynamic programming technique in two dimensions with the Kuhn-Tucker saddle point theorems applied in each stage.
Economic, marketing, and legislative considerations are increasingly leading companies to take back and recover their products after use. From a logistics perspective, these initiatives give rise to new goods flows from the user back to the producer. The management of these goods flows opposite to the traditional supply chain flows is addressed in the recently emerged field of Reverse Logistics. This monograph considers quantitative models that support decision making in Reverse Logistics. To this end, several recent case studies are reviewed. Moreover, first hand insight from a study on used electronic equipment is reported on. On this basis, logistics issues arising in the management of "reverse" goods flows are identified. Moreover, differences between Reverse Logistics and more traditional logistics contexts are highlighted. Finally, attention is paid to capturing the characteristics of Reverse Logistics in appropriate quantitative models.
For further details about this dissertation, please visit the website of Springer Verlag, the publisher of this dissertation.
http://www.springeronline.com
Series: Lecture Notes in Economics and Mathematical Systems , Vol. 501, Fleischmann, Moritz, 1st ed. 2001. 2nd printing, 2004, XI, 181 p., Softcover , ISBN: 3-540-41711-7
We address the problem of determining the optimal retailer order quantities from a manufacturer who makes new products in conjunction with ordering remanufactured products from a remanufacturer using used and unsold products from the previous product generation. Specifically, we determine the optimal order quantity by the retailer for four systems of decision-making: (a) the three firms make their decisions in a coordinated fashion, (b) the retailer acts independently while the manufacturer and remanufacturer coordinate their decisions, (c) the remanufacturer acts independently while the retailer and manufacturer coordinate their decisions, and (d) all three firms act independently. We model the four options described above as centralized or decentralized decision-making systems with the manufacturer being the Stackelberg leader and provide insights into the optimal order quantities. Coordination mechanisms are then provided which enable the different players to achieve jointly the equivalent profits in a coordinated channel.
Closed-loop supply chains (CLSC) have product returns at the center of attention. Our view is that CLSC are best managed from a business perspective where organizations seek to maximize value recovery. The research in the feature issue, and our experiences, shows that there are still numerous, unresolved, managerially relevant issues that deserve further investigation. We also observe that there is a pressing need to validate the assumptions in our models using interdisciplinary, industry-driven research. The time is right for production and operations management to play a central role in the sustainability movement slowly taking hold in practice.
Most retailers suffer from substantial discrepancies between inventory quantities recorded in the system and stocks truly available to customers. Promising full inventory transparency, radio frequency identification (RFID) technology has often been suggested as a remedy to the problem. We consider inventory record inaccuracy in a supply chain model, where a Stackelberg manufacturer sets the wholesale price and a retailer determines how much to stock for sale to customers. We first analyze the impact of inventory record inaccuracy on optimal stocking decisions and profits. By contrasting optimal decisions in a decentralized supply chain with those in an integrated supply chain, we find that inventory record inaccuracy exacerbates the inefficiencies resulting from double marginalization in decentralized supply chains. Assuming RFID technology can eliminate the problem of inventory record inaccuracy, we determine the cost thresholds at which RFID adoption becomes profitable. We show that a decentralized supply chain benefits more from RFID technology, such that RFID adoption improves supply chain coordination.
R FID (Radio-Frequency Identification) technology has shown itself to be a promising technology to track movements of goods in a supply chain. As such, it can give unprecedented visibility to the supply chain. Such visibility can save labor cost, improve supply chain coordination, reduce inventory, and increase product availability. Industry reports and white papers are now filled with estimates and proclamations of the benefits and quantified values of RFID. Early adopters are now rallying more and more followers. However, most such claims are educated guesses at best and are not substantiated, that is, they are not based on detailed, model-based analysis. This paper argues that there is a huge credibility gap of the value of RFID, and that a void exists in showing how the proclaimed values are arrived at, and how those values can be realized. The paper shows that this credibility gap must be filled with solid model analysis, and therefore presents a great opportunity for the Production and Operations Manage-ment (POM) research community. The paper reviews some of the ongoing research efforts that attempt to close the credibility gap, and suggests additional directions for further strengthening the POM's contribution to help industry realize the full potentials of RFID.
We explore the value of information (VOI) in the context of a firm that faces uncertainty with respect to demand, product return, and product recovery (yield). The operational decision of interest in matching supply with demand is the quantity of new product to order. Our objective is to evaluate the VOI from reducing one or more types of uncertainties, where value is measured by the reduction in total expected holding and shortage costs.
We start with a single period model with normally distributed demands and returns, and restrict the analysis to the value of full information (VOFI) on one or more types of uncertainty. We develop estimators that are predictive of the value and sensitivity of (combinations of) different information types. We find that there is no dominance in value amongst the different types of information, and that there is an additional pay‐off from investing in more than one type.
We then extend our analysis to the multi‐period case, where returns in a period are correlated with demands in the previous period, and study the value of partial information (VOPI) as well as full information. We demonstrate that our results from the single period model (adapted for VOPI) carry‐over exactly. Furthermore, a comparison with uniformly distributed demand and return show that these results are robust with respect to distributional assumptions.
Mostly fueled by mandates, adoption, and implementation of the RFID, technology in the retail industry is growing rapidly. At these early stages of adoption, one puzzling issue for retailers and suppliers is the compelling business case for RFID. In order to explore the potential business case for RFID, we conducted a case study using actual RFID data collected by a major retailer for the cases shipped by one of its major suppliers. We show the physical layout of the RFID readers on a partial supply-chain covering product movement from distribution centers to retail stores. First, in the analysis phase, we identify several performance metrics that can be computed from the RFID readings. Next, using this RFID data, we compute the values of those performance metrics. These values represent mean time between movements at different locations. Then, we discuss how these measures can assist in improving logistical performance at a micro supply chain level of operations between a distribution center and a retail store. We present how such information can be valuable to both the retail store operator and the supplier. We also discuss the initial lessons learned from actual RFID data collected in the field, in terms of data quality issues.
Manufacturers often face a choice of whether to recover the value in their end-of-life products through remanufacturing. In many cases, firms choose not to remanufacture, as they are (rightly) concerned that the remanufactured product will cannibalize sales of the higher-margin new product. However, such a strategy may backfire for manufacturers operating in industries where their end-of-life products (cell phones, tires, computers, automotive parts, etc.) are attractive to third-party remanufacturers, who may seriously cannibalize sales of the original manufacturer. In this paper, we develop models to support a manufacturer's recovery strategy in the face of a competitive threat on the remanufactured product market. We first analyze the competition between new and remanufactured products produced by a monopolist manufacturer and identify conditions under which the firm would choose not to remanufacture its products. We then characterize the potential profit loss due to external remanufacturing competition and analyze two entry-deterrent strategies: remanufacturing and preemptive collection. We find that a firm may choose to remanufacture or preemptively collect its used products to deter entry, even when the firm would not have chosen to do so under a pure monopoly environment. Finally, we discuss conditions under which each strategy is more beneficial.
In traditional supply chain inventory management, orders are the only information firms exchange, but information technology now allows firms to share demand and inventory data quickly and inexpensively. We study the value of sharing these data in a model with one supplier, N identical retailers, and stationary stochastic consumer demand. There are inventory holding costs and back-order penalty costs. We compare a traditional information policy that does not use shared information with a full information policy that does exploit shared information. In a numerical study we find that supply chain costs are 2.2% lower on average with the full information policy than with the traditional information policy, and the maximum difference is 12.1%. We also develop a simulation-based lower bound over all feasible policies. The cost difference between the traditional information policy and the lower bound is an upper bound on the value of information sharing: In the same study, that difference is 3.4% on average, and no more than 13.8%. We contrast the value of information sharing with two other benefits of information technology, faster and cheaper order processing, which lead to shorter lead times and smaller batch sizes, respectively. In our sample, cutting lead times nearly in half reduces costs by 21% on average, and cutting batches in half reduces costs by 22% on average. For the settings we study, we conclude that implementing information technology to accelerate and smooth the physical flow of goods through a supply chain is significantly more valuable than using information technology to expand the flow of information.
The paper addresses a problem of product recovery management where a single product is stocked in order to fulfill a stochastic demand of customers who may return products after usage, thus generating also stochastic product returns. The material flow can be controlled by procuring new products on the one hand, and by remanufacturing or disposal of returned items on the other. A situation is considered where all costs are proportional and where remanufacturing as well as procurement needs a fixed deterministic leadtime which can be different for both activities. For periodic review control it is shown how the optimal decision rules for procurement, remanufacturing and disposal can be evaluated by exploiting the functional equations of a dynamic programming formulation. The serious impact of leadtimes on the complexity of the control rule is elaborated, and it is demonstrated for which leadtime situations simple optimal policies can be derived.
To a growing extent companies take recovery of used products into account in their material management. One aspect distinguishing inventory control in this context from traditional settings is an exogenous inbound material flow. We analyze the impact of this inbound flow on inventory control. To this end, we consider a single inventory point facing independent stochastic demand and item returns. This comes down to a variant of a traditional stochastic single-item inventory model where demand may be both positive or negative. Using general results on Markov decision processes we show average cost optimality of an (s,S)-order policy in this model. The key result concerns a transformation of the model into an equivalent traditional (s,S)-model without return flows, using a decomposition of the inventory position. Traditional optimization algorithms can then be applied to determine control parameter values. We illustrate the impact of the return flow on system costs in a numerical example.
In this paper we consider a stochastic inventory system with production, remanufacturing, and disposal operations. Customer demands must either be fulfilled from the production of new products or by the remanufacturing of used products. Used products are either remanufactured or disposed of. To coordinate production, remanufacturing and disposal operations efficiently, we extend the PUSH and PULL strategies that Van der Laan et al. developed to control a system in which all returned products are remanufactured and no planned disposals occur. The other contributions of this paper are to indicate when and why planned disposals are economically beneficial, and to compare the PUSH-disposal strategy to the PULL-disposal strategy. In addition, we investigate the robustness of the control parameters of the PUSH- and PULL-disposal strategy over the different stages of a product life-cycle.
Environmental legislation and customer expectations increasingly force manufacturers to take back their products after use. Returned products may enter the production process again as input resources. Material management has to be modified accordingly.One of the areas concerned is inventory management. The present paper provides a step towards a systematic analysis of inventory control in the context of reuse. A basic inventory model is presented comprising Poisson demand and returns. For this model, an optimal control policy is derived and optimal control parameters are computed. Moreover, a numerical analysis is provided of the impact of the return-flow on the inventory system. Comparison with traditional (s,Q)-inventory models is central throughout the analysis.
We analyze a multiechelon inventory system with inventory stages arranged in series. In addition to traditional forward material flows, used products are returned to a recovery facility, where they can be stored, disposed, or remanufactured and shipped to one of the stages to re-enter the forward flow of material. This system combines the key elements of two simpler systems: the series system studied by Clark and Scarf (1960) and the single-stage remanufacturing systems studied by Simpson (1978) and Inderfurth (1997). We focus on identifying the structure of the optimal remanufacturing/ordering/disposal policy for such a system. In particular, we investigate whether the optimal policy inherits the basic structural properties of the simpler systems. We show that if remanufactured items flow into the most upstream stage, then this is the case. Specifically, the system can be solved by decomposition into a sequence of single-stage systems, with each downstream stage following an echelon base-stock policy and the most upstream stage following a three-parameter policy with a simple (and intuitive) structure. We show that similar results hold when remanufactured products flow into a downstream stage; however, in this case some modifications must be made. In particular, the definition of echelon inventory must be adjusted for stages upstream of the remanufacturing stage, and disposal of used items can no longer be allowed. We also compare the information required for managing this system to that required in the Clark and Scarf or Inderfurth settings, and we point out how the requirements are somewhat different depending on whether remanufacturing occurs upstream or downstream.
RFID and product Karaer and Lee: RFID in the Reverse Channel progress information: Improved emergency ordering policies
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Retail reverse logistics practice Business Aspects of Closed-Loop Supply Chains: Exploring the Issues Business Aspects of Closed-Loop Supply Chains: Exploring the Issues
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Tibben-Lembke, R. S., D. S. Rogers. 2003. Retail reverse logistics practice. V. Guide, Jr., L. van Wassenhove, eds. Business Aspects of Closed-Loop Supply Chains: Exploring the Issues. Carnegie Mel-lon University Press, Pittsburgh. Toktay, L. B. 2003. Forecasting product returns. V. Guide, Jr., L. van Wassenhove, eds. Business Aspects of Closed-Loop Supply Chains: Exploring the Issues. Carnegie Mellon University Press, Pitts-burgh.
KPN to use RFID to track phones
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A real-world look at RFID
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Murphy-Hoye, M., H. L. Lee, J. B. Rice. 2005. A real-world look at RFID. Supply Chain Management Review 9(5) 18 –26.
Inspection and replenishment policies for systems with inventory record inaccuracy. Working Paper, Fuqua School of Business Product modularity and the design of closed-loop supply chains
- K H Shang
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If the inventory manager knew: Value of RFID under imperfect inventory information, Work-ing Paper Optimal order quantities with remanufacturing across new product generations
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HP takes RFID end to end
- M Roberti
A real-world look at RFID
- Murphy-Hoye