Resource downgrading

This paper aims to develop models to optimally manage costs associated with resources that can be downgraded. These resources are reused a number of times before becoming unsuitable for their original purpose, and then they are assigned for some other purpose. The typical decisions are the quantity of resources to purchase, to downgrade and to hold in the inventory. A network-based model is developed to formulate the problem and to investigate several special cases. As the model becomes an integer program due to some side constraints, several heuristics are developed here to overcome the challenges associated with solving the resulting integer program. A semiconductor industry application for test wafer management is presented using real-life data.