A reverse logistics valuation method for inventory control

A reverse logistics valuation method for inventory control

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Article ID: iaor200231
Country: United Kingdom
Volume: 39
Issue: 9
Start Page Number: 2023
End Page Number: 2035
Publication Date: Jan 2001
Journal: International Journal of Production Research
Authors:
Keywords: simulation: applications
Abstract:

We propose a method for valuing new, recoverable, and recovered assemblies (products, components, parts, etc.) in production systems with reverse logistics. Values of assemblies influence their opportunity holding cost rates and are hence essential for comparing inventory strategies in average cost models. We argue that the proposed method is ‘correct’ from a discounted cash flow (DCF) point of view. We refer to some previous results on valuing assemblies in systems without disassembly of returned products that seem to confirm this. Furthermore, we test the method for a specific example with disassembly of returned products. The simulation results indicate that the method indeed leads to (nearly) DCF optimal inventory strategies.

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