Product recovery in stochastic remanufacturing systems with multiple reuse options

In many product recovery situations, returned products can be reused in multiple ways. Under these circumstances, the problem arises in which quantities reusable items should be allocated to the different remanufacturing options, especially in case of insufficient stock of returns. For this problem a periodic review model is formulated which also includes a disposal option and incorporates uncertainties in returns and demands for the different serviceable options. The structure of the optimal policy is analyzed, and it is shown that under specific allocation rules a near-optimal policy with a simple structure exists. An efficient computational procedure for determination of the optimal policy parameters is presented. This procedure is applied in a numerical investigation that gives interesting managerial insights into important product recovery issues.