Title: Inventory decisions in a closed-loop supply chain system with learning and rework

Authors: Wakhid Ahmad Jauhari; Oktiviandri Hendaryani; Nughthoh Arfawi Kurdhi

Addresses: Department of Industrial Engineering, Sebelas Maret University, Jl. Ir Sutami 36 A, Surakarta 57126, Indonesia ' Production System Laboratory, Department of Industrial Engineering, Sebelas Maret University, Jl. Ir Sutami 36 A, Surakarta 57126, Indonesia ' Department of Mathematics, Faculty of Mathematics and Natural Science, Sebelas Maret University, Jl. Ir Sutami 36 A, Surakarta 57126, Indonesia

Abstract: In this study, we investigate a closed-loop supply chain model consisting of a manufacturer and a retailer. The retailer orders items from the manufacturer to satisfy the end customer's demand. The manufacturer uses both regular production and remanufacturing processes to produce items to fulfill the demand from the retailer. The returned items are collected and screened by the manufacturer for recovering process. We consider learning process in regular production and remanufacturing processes. In addition, the imperfect items produced during regular production are reworked. The model contributes to the current literature by allowing the inclusion of learning process in regular production and remanufacturing processes, imperfect items, rework and multiple cycle policy. Our objective is to optimise the percentage of the used item purchasing price per raw material cost, retailer ordering cycle, number of regular production cycles and the number of remanufacturing cycles, so that the joint expected total annual profit incurred has a minimum value. Furthermore, an algorithm is proposed to find the solutions of the proposed model. We also provide a numerical example and perform a sensitivity analysis to illustrate the model's behaviour and feasibility.

Keywords: closed-loop supply chain; reverse logistic; learning; rework; defective item; remanufacturing.

DOI: 10.1504/IJPM.2018.094352

International Journal of Procurement Management, 2018 Vol.11 No.5, pp.551 - 585

Received: 13 Apr 2017
Accepted: 23 Jul 2017
Published online: 30 Aug 2018 *

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