Cost performance and bullwhip effect in a hybrid manufacturing and remanufacturing system with different control policies

In recent years, remanufacturing has emerged as an important research area. This requires developing methods and models in order to aid companies in systematically evaluating current as well as projected remanufacturing systems. This paper addresses the inventory control problem in a hybrid inventory system with manufacturing and remanufacturing options. In this study, by changing the definition of inventory position of the serviceable stock, we introduce a shift PULL inventory control policy, which is compared with PULL, DUAL, and Separate PULL control policies studied previously in the literature. Besides evaluating the economic consequences with different control policies, we also study system dynamic behaviour such as the bullwhip effect, in order to understand the advantages and disadvantages of different policies. After the experiments, we propose several management guidelines for such a hybrid inventory system. The major findings are: (1) separate PULL and DUAL can be good alternatives when the manufacturing lead time is significantly longer than the remanufacturing lead time; (2) shifted PULL exhibits a good performance when the two lead times differ slightly. Owing to the complexity in solving the optimization problem, a simulation approach is used.