ZLC Seminar Series: "Supply Chain Design for Unlocking the Value of Remanufacturing Under Uncertainty"

Abstract
Owing to the ever-increasing technological innovation and highly flexible return policies, remanufacturing has gained enormous economic potential in the past decade. Currently very little, if any, value is recovered by the manufacturer, as they are concerned that they cannot get enough returned products to generate economic value from in-house remanufacturing; and the remanufactured product will cannibalize sales of the higher-margin new product. In this paper, we propose an integrated stochastic CLSC network design model that explicitly considers different sources of uncertainty and the differences in customer valuation of new and remanufactured products. A solution algorithm is proposed to tackle the arising mixed integer quadratic program. The proposed methodology is illustrated using a new case based on BSH Bosch und Siemens Hausgerte GmbH in the context of their closed-loop network design for refrigerator under EPR in Germany. Our results show that by incorporating uncertainty in strategic product recovery decision planning, an OEM can identify the conditions where the CLSC system performs robustly under uncertainty. In this way, the firm can enhance its profitability and perform consistently well in such an uncertain environment.

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