Robust optimal policies of production and inventory with uncertain returns and demand

Robust optimal policies of production and inventory with uncertain returns and demand

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Article ID: iaor20119092
Volume: 134
Issue: 2
Start Page Number: 357
End Page Number: 367
Publication Date: Dec 2011
Journal: International Journal of Production Economics
Authors: , ,
Keywords: demand
Abstract:

We consider an inventory and production planning problem with uncertain demand and returns, in which the product return process is integrated into the manufacturing process over a finite planning horizon. We first propose an inventory control model for the return and remanufacturing processes with consideration of the uncertainty of the demand and returns. Then a robust optimization approach is applied to deal with the uncertainty of the problem through formulating a robust linear programming model. Moreover, properties on the robust optimization model are studied, and an equivalent robust optimization model based on duality theory is obtained which allows the solutions to be derived more efficiently. Finally, we provide a set of numerical examples to verify the effectiveness of the approach and analyze the effects of the key parameters on the solutions.

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