[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v225y2013i1p44-58.html
   My bibliography  Save this article

Flexible long-term capacity planning in closed-loop supply chains with remanufacturing

Author

Listed:
  • Georgiadis, Patroklos
  • Athanasiou, Efstratios
Abstract
We deal with long-term demand-driven capacity planning policies in the reverse channel of closed-loop supply chains (CLSCs) with remanufacturing, under high capacity acquisition cost coupled with uncertainty in actual demand, sales patterns, quality and timing of end-of-use product returns. The objective is to facilitate the decision-making when the management faces the dilemma of implementing either a strategy of early large-scale investments to benefit from economies of scale and capacity readiness, or a flexible strategy of low volume but more frequent capacity expansions. We consider a CLSC with two sequential product-types. We study the system’s response in terms of transient flows, actual/desired capacity level, capacity expansions/contractions and total supply chain profit, employing a simulation-based system dynamics optimization approach. Extensive numerical investigation covers a broad range of real-world remanufacturable products under alternative scenarios in relation to the market preference over product-types. The key findings propose flexible policies as improved alternatives to large-scale capacity expansions/contractions in terms of adaptability to the actual pattern of end-of-use product returns and involved risk in the investments’ turnover. Flexible policies are also proposed as practices to avoid overcapacity phenomena in collection and remanufacturing capacity and as robust policies to product demand. Their implementation is revealed to be even more important for the case of remanufacturing, when a high capacity acquisition unit-cost ratio (remanufacturing/collection) is coupled with strong economies of scale. Finally, results under different information sharing structures show changes in remanufacturing policies, thus justifying the importance of coordination between the decision-maker and the distributor.

Suggested Citation

  • Georgiadis, Patroklos & Athanasiou, Efstratios, 2013. "Flexible long-term capacity planning in closed-loop supply chains with remanufacturing," European Journal of Operational Research, Elsevier, vol. 225(1), pages 44-58.
    • Handle: RePEc:eee:ejores:v:225:y:2013:i:1:p:44-58
    DOI: 10.1016/j.ejor.2012.09.021
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221712006856
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2012.09.021?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lebreton, Baptiste & Tuma, Axel, 2006. "A quantitative approach to assessing the profitability of car and truck tire remanufacturing," International Journal of Production Economics, Elsevier, vol. 104(2), pages 639-652, December.
    2. Roland Geyer & Luk N. Van Wassenhove & Atalay Atasu, 2007. "The Economics of Remanufacturing Under Limited Component Durability and Finite Product Life Cycles," Management Science, INFORMS, vol. 53(1), pages 88-100, January.
    3. Min, Hokey & Jeung Ko, Hyun & Seong Ko, Chang, 2006. "A genetic algorithm approach to developing the multi-echelon reverse logistics network for product returns," Omega, Elsevier, vol. 34(1), pages 56-69, January.
    4. Hanan Luss, 1982. "Operations Research and Capacity Expansion Problems: A Survey," Operations Research, INFORMS, vol. 30(5), pages 907-947, October.
    5. Salema, Maria Isabel Gomes & Barbosa-Povoa, Ana Paula & Novais, Augusto Q., 2007. "An optimization model for the design of a capacitated multi-product reverse logistics network with uncertainty," European Journal of Operational Research, Elsevier, vol. 179(3), pages 1063-1077, June.
    6. Sarah M. Ryan, 2004. "Capacity Expansion for Random Exponential Demand Growth with Lead Times," Management Science, INFORMS, vol. 50(6), pages 740-748, June.
    7. Higle, Julia L. & Corrado, Charles J., 1992. "Economic investment times for capacity expansion problems," European Journal of Operational Research, Elsevier, vol. 59(2), pages 288-293, June.
    8. Özdemir, Öznur & Denizel, Meltem & Guide, V. Daniel R., 2012. "Recovery decisions of a producer in a legislative disposal fee environment," European Journal of Operational Research, Elsevier, vol. 216(2), pages 293-300.
    9. Chakravarty, Amiya K., 2005. "Global plant capacity and product allocation with pricing decisions," European Journal of Operational Research, Elsevier, vol. 165(1), pages 157-181, August.
    10. John D. Sterman, 1989. "Modeling Managerial Behavior: Misperceptions of Feedback in a Dynamic Decision Making Experiment," Management Science, INFORMS, vol. 35(3), pages 321-339, March.
    11. V. Daniel R. Guide & Terry P. Harrison & Luk N. Van Wassenhove, 2003. "The Challenge of Closed-Loop Supply Chains," Interfaces, INFORMS, vol. 33(6), pages 3-6, December.
    12. Pindyck, Robert S, 1988. "Irreversible Investment, Capacity Choice, and the Value of the Firm," American Economic Review, American Economic Association, vol. 78(5), pages 969-985, December.
    13. Melo, M.T. & Nickel, S. & Saldanha-da-Gama, F., 2009. "Facility location and supply chain management - A review," European Journal of Operational Research, Elsevier, vol. 196(2), pages 401-412, July.
    14. Franke, C. & Basdere, B. & Ciupek, M. & Seliger, S., 2006. "Remanufacturing of mobile phones--capacity, program and facility adaptation planning," Omega, Elsevier, vol. 34(6), pages 562-570, December.
    15. Borgonovo, E. & Peccati, L., 2004. "Sensitivity analysis in investment project evaluation," International Journal of Production Economics, Elsevier, vol. 90(1), pages 17-25, July.
    16. Kaya, Onur, 2010. "Incentive and production decisions for remanufacturing operations," European Journal of Operational Research, Elsevier, vol. 201(2), pages 442-453, March.
    17. Dmitry Ivanov & Boris Sokolov & Joachim Kaeschel, 2011. "Integrated supply chain planning based on a combined application of operations research and optimal control," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 19(3), pages 299-317, September.
    18. Kamath, Narasimha B. & Roy, Rahul, 2007. "Capacity augmentation of a supply chain for a short lifecycle product: A system dynamics framework," European Journal of Operational Research, Elsevier, vol. 179(2), pages 334-351, June.
    19. Alexandar Angelus & Evan L. Porteus, 2002. "Simultaneous Capacity and Production Management of Short-Life-Cycle, Produce-to-Stock Goods Under Stochastic Demand," Management Science, INFORMS, vol. 48(3), pages 399-413, March.
    20. Francas, David & Minner, Stefan, 2009. "Manufacturing network configuration in supply chains with product recovery," Omega, Elsevier, vol. 37(4), pages 757-769, August.
    21. Bish, Ebru K. & Hong, Seong J., 2006. "Coordinating the resource investment decision for a two-market, price-setting firm," International Journal of Production Economics, Elsevier, vol. 101(1), pages 63-88, May.
    22. Vernon Ning Hsu, 2002. "Dynamic Capacity Expansion Problem with Deferred Expansion and Age-Dependent Shortage Cost," Manufacturing & Service Operations Management, INFORMS, vol. 4(1), pages 44-54, June.
    23. S. Rajagopalan, 1998. "Capacity Expansion and Equipment Replacement: A Unified Approach," Operations Research, INFORMS, vol. 46(6), pages 846-857, December.
    24. Sampath Rajagopalan & Jayashankar M. Swaminathan, 2001. "A Coordinated Production Planning Model with Capacity Expansion and Inventory Management," Management Science, INFORMS, vol. 47(11), pages 1562-1580, November.
    25. Chand, Suresh & McClurg, Tim & Ward, Jim, 2000. "A model for parallel machine replacement with capacity expansion," European Journal of Operational Research, Elsevier, vol. 121(3), pages 519-531, March.
    26. Georgiadis, Patroklos & Vlachos, Dimitrios, 2004. "The effect of environmental parameters on product recovery," European Journal of Operational Research, Elsevier, vol. 157(2), pages 449-464, September.
    27. Julka, Nirupam & Baines, Tim & Tjahjono, Benny & Lendermann, Peter & Vitanov, Val, 2007. "A review of multi-factor capacity expansion models for manufacturing plants: Searching for a holistic decision aid," International Journal of Production Economics, Elsevier, vol. 106(2), pages 607-621, April.
    28. Perrone, Giovanni & Amico, Michele & Lo Nigro, Giovanna & Noto La Diega, Sergio, 2002. "Long term capacity decisions in uncertain markets for advanced manufacturing systems incorporating scope economies," European Journal of Operational Research, Elsevier, vol. 143(1), pages 125-137, November.
    29. Ferrer, Geraldo, 2001. "On the widget remanufacturing operation," European Journal of Operational Research, Elsevier, vol. 135(2), pages 373-393, December.
    30. Östlin, Johan & Sundin, Erik & Björkman, Mats, 2008. "Importance of closed-loop supply chain relationships for product remanufacturing," International Journal of Production Economics, Elsevier, vol. 115(2), pages 336-348, October.
    31. Sunder Kekre & Uday S. Rao & Jayashankar M. Swaminathan & Jun Zhang, 2003. "Reconfiguring a Remanufacturing Line at Visteon, Mexico," Interfaces, INFORMS, vol. 33(6), pages 30-43, December.
    32. Eberly, Janice C. & Van Mieghem, Jan A., 1997. "Multi-factor Dynamic Investment under Uncertainty," Journal of Economic Theory, Elsevier, vol. 75(2), pages 345-387, August.
    33. Shanling Li & Devanath Tirupati, 1994. "Dynamic Capacity Expansion Problem with Multiple Products: Technology Selection and Timing of Capacity Additions," Operations Research, INFORMS, vol. 42(5), pages 958-976, October.
    34. Jan A. Van Mieghem, 2003. "Commissioned Paper: Capacity Management, Investment, and Hedging: Review and Recent Developments," Manufacturing & Service Operations Management, INFORMS, vol. 5(4), pages 269-302, July.
    35. Georgiadis, Patroklos & Athanasiou, Efstratios, 2010. "The impact of two-product joint lifecycles on capacity planning of remanufacturing networks," European Journal of Operational Research, Elsevier, vol. 202(2), pages 420-433, April.
    36. Frank Schultmann & Bernd Engels & Otto Rentz, 2003. "Closed-Loop Supply Chains for Spent Batteries," Interfaces, INFORMS, vol. 33(6), pages 57-71, December.
    37. Sterman, John D., 1989. "Misperceptions of feedback in dynamic decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 43(3), pages 301-335, June.
    38. Cochran, Jeffery K. & Marquez Uribe, Alberto, 2005. "A set covering formulation for agile capacity planning within supply chains," International Journal of Production Economics, Elsevier, vol. 95(2), pages 139-149, February.
    39. John R. Birge, 2000. "Option Methods for Incorporating Risk into Linear Capacity Planning Models," Manufacturing & Service Operations Management, INFORMS, vol. 2(1), pages 19-31, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Julka, Nirupam & Baines, Tim & Tjahjono, Benny & Lendermann, Peter & Vitanov, Val, 2007. "A review of multi-factor capacity expansion models for manufacturing plants: Searching for a holistic decision aid," International Journal of Production Economics, Elsevier, vol. 106(2), pages 607-621, April.
    2. Georgiadis, Patroklos & Athanasiou, Efstratios, 2010. "The impact of two-product joint lifecycles on capacity planning of remanufacturing networks," European Journal of Operational Research, Elsevier, vol. 202(2), pages 420-433, April.
    3. Martínez-Costa, Carme & Mas-Machuca, Marta & Benedito, Ernest & Corominas, Albert, 2014. "A review of mathematical programming models for strategic capacity planning in manufacturing," International Journal of Production Economics, Elsevier, vol. 153(C), pages 66-85.
    4. Jan A. Van Mieghem, 2003. "Commissioned Paper: Capacity Management, Investment, and Hedging: Review and Recent Developments," Manufacturing & Service Operations Management, INFORMS, vol. 5(4), pages 269-302, July.
    5. Govindan, Kannan & Soleimani, Hamed & Kannan, Devika, 2015. "Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future," European Journal of Operational Research, Elsevier, vol. 240(3), pages 603-626.
    6. Hongmin Li & Stephen C. Graves & Woonghee Tim Huh, 2014. "Optimal Capacity Conversion for Product Transitions Under High Service Requirements," Manufacturing & Service Operations Management, INFORMS, vol. 16(1), pages 46-60, February.
    7. Hahn, G.J. & Kuhn, H., 2012. "Simultaneous investment, operations, and financial planning in supply chains: A value-based optimization approach," International Journal of Production Economics, Elsevier, vol. 140(2), pages 559-569.
    8. Porteus, Evan L. & Angelus, Alexandar & Wood, Samuel C., 2000. "Optimal Sizing and Timing of Modular Capacity Expansions," Research Papers 1479r2, Stanford University, Graduate School of Business.
    9. Lijian Lu & Xiaoming Yan, 2016. "Capacity investment decisions under risk aversion," Naval Research Logistics (NRL), John Wiley & Sons, vol. 63(3), pages 218-235, April.
    10. Melo, M.T. & Nickel, S. & Saldanha-da-Gama, F., 2009. "Facility location and supply chain management - A review," European Journal of Operational Research, Elsevier, vol. 196(2), pages 401-412, July.
    11. Wenbin Wang & Mark E. Ferguson & Shanshan Hu & Gilvan C. Souza, 2013. "Dynamic Capacity Investment with Two Competing Technologies," Manufacturing & Service Operations Management, INFORMS, vol. 15(4), pages 616-629, October.
    12. Metin Çakanyıldırım & Robin O. Roundy & Samuel C. Wood, 2004. "Optimal machine capacity expansions with nested limitations under stochastic demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 51(2), pages 217-241, March.
    13. Jodlbauer, Herbert & Altendorfer, Klaus, 2010. "Trade-off between capacity invested and inventory needed," European Journal of Operational Research, Elsevier, vol. 203(1), pages 118-133, May.
    14. Qin, Ruwen & Nembhard, David A., 2012. "Demand modeling of stochastic product diffusion over the life cycle," International Journal of Production Economics, Elsevier, vol. 137(2), pages 201-210.
    15. Bhattacharya, Sourabh & Govindan, Kannan & Ghosh Dastidar, Surajit & Sharma, Preeti, 2024. "Applications of artificial intelligence in closed-loop supply chains: Systematic literature review and future research agenda," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 184(C).
    16. Sabet, Ehsan & Yazdani, Baback & Kian, Ramez & Galanakis, Kostas, 2020. "A strategic and global manufacturing capacity management optimisation model: A Scenario-based multi-stage stochastic programming approach," Omega, Elsevier, vol. 93(C).
    17. Van-Anh Truong & Robin O. Roundy, 2011. "Multidimensional Approximation Algorithms for Capacity-Expansion Problems," Operations Research, INFORMS, vol. 59(2), pages 313-327, April.
    18. Xiuli Chao & Hong Chen & Shaohui Zheng, 2009. "Dynamic Capacity Expansion for a Service Firm with Capacity Deterioration and Supply Uncertainty," Operations Research, INFORMS, vol. 57(1), pages 82-93, February.
    19. Li, Xishu & Zuidwijk, Rob & de Koster, M.B.M, 2023. "Optimal competitive capacity strategies: Evidence from the container shipping market," Omega, Elsevier, vol. 115(C).
    20. Alexandar Angelus & Evan L. Porteus, 2008. "An Asset Assembly Problem," Operations Research, INFORMS, vol. 56(3), pages 665-680, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:225:y:2013:i:1:p:44-58. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.