When can advance notice be most beneficial for closed loop supply chains?


We investigate the impact of advance notice of product returns on the performance of a closed loop supply chain with lead-times. Our closed loop supply chain consists of a manufacturer and an external remanufacturer. The market demands and the product returns are stochastic and correlated with each other. After a lead-time the used products are converted into as-good-as-new products to be used, together with new products, to satisfy market demand. The remanufacturing process is subject to random yield. We investigate the benefit of the manufacturer obtaining advance notice of the product return quantities from the remanufacturer. We demonstrate that lead-times, random yields and parameters describing the return rate have a significant impact on the manufacturer’s performance with this additional information. The interesting and counter-intuitive result is that increasing the lead-time at the remanufacturer can improve the benefit coming from the advance notice.

Pre-prints of the 18th International Working Seminar of Production Economics, Innsbruck, Austria, 24th-28th Feburary, Vol. 2, 267-279