Journal Title
Title of Journal: Oper Manag Res
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Abbravation: Operations Management Research
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Authors: V Daniel R Guide Evrim Didem Gunes Gilvan C Souza Luk N Van Wassenhove
Publish Date: 2008/02/02
Volume: 1, Issue: 1, Pages: 6-14
Abstract
We provide an analytic model for the optimal disposition decision for product returns The manager decides which product returns to accept for processing at the remanufacturing facility and which ones to sell immediately asis at a salvage value High congestion levels in the remanufacturing facility delay the sale of the remanufactured product at the secondary market decreasing the value at which it can be sold this may imply a more attractive salvaging option This is particularly important for hightech products with short life cycles such as computers and printers We propose a twostep policy In the first step the returned product’s random processing time is observed In the second step a disposition decision is made if the processing time is larger than a threshold k the product is salvaged otherwise the product is remanufactured We provide an approximate procedure to compute k in industrial settings Our numerical study demonstrates the superiority of our policy over the current industrial practice ignoring the time value of money
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