Yield information and supplier responsiveness in remanufacturing operations

When making used product disassembly and procurement decisions, managers of remanufacturing facilities usually face limited information on remanufacturing yields or a potentially long supplier lead time. To help make the decision, managers may attempt to identify the reparable parts early in the recovery process, to develop a responsive supplier with reactive capacity, or to implement an information system that helps to identify the wear state of the used machines that are available for remanufacturing. This paper provides optimal lot-size policies for each of these scenarios, which are then used to compare the relative value of the alternatives under a broad range of parameters. We find that: (1) as the yield variance increases, the benefits of developing early detection capability of the process yield at the disassembly stage outweigh the advantage of having suppliers with short lead times; (2) as the shortage cost increases, it is preferable to have a responsive supplier that can deliver with short lead times; and (3) as the purchase, repair or holding cost increases, it is preferable to have the capability to detect process yield early.