Optimal manufacturing/remanufacturing policies with fixed investment for the underdeveloped remanufacturing system

Publication Type:
Journal Article
Tehnicki Vjesnik, 2017, 24 (5), pp. 1491 - 1499
Issue Date:
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© 2017, Strojarski Facultet. All rights reserved. In an underdeveloped remanufacturing system, poor infrastructure and low technical level impede further development of remanufacturing. To overcome this obstacle, a huge amount of fixed investment is required to improve the remanufacturing system. However, this investment inevitably influences the manufacturer’s manufacturing/remanufacturing decision-making economically. The relationship between fixed investment and recycling ratio was investigated, and the two- and multi-period manufacturing/remanufacturing mixed optimization models were developed. Based on the Karush-Kuhn-Tucker (KKT) conditions, the optimal manufacturing/remanufacturing and fixed investment policies were obtained in closed-form expressions. Moreover, the influences of the fixed investment were analysed. Results show that the optimal policies are significantly influenced by the degree of underdevelopment of the remanufacturing system. When the remanufacturing system is underdeveloped, the manufacturer shows a lack of enthusiasm in remanufacturing, thereby resulting in the decrease of the investment and the recycling ratio. The manufacturer raises the sale price to alleviate the loss caused by fixed investment, but the total manufacturing quantity and profit decrease. In the multi-period case, the manufacturer gradually increases the investment for continuously improving the remanufacturing system to increase the recycling ratio and obtain additional profits from remanufacturing. The proposed models can effectively provide the reference for determining the reasonable manufacturing/remanufacturing and fixed investment policies in the underdeveloped remanufacturing system.
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