System Dynamics modelling of a production and inventory system for remanufacturing to evaluate system improvement strategies

Remanufacturing activity views the reverse supply chain of reclaimed goods as integral to the traditional supply chain to the consumer. At the end of the useful life of products, a reverse supply process is activated in which unwanted materials and products are recovered from end users to recapture some of their value. Therefore, planning for the traditional supply chain of goods must take into account the recovered products. Two main processes that need to be considered are inventory control and production planning. In this paper, we model a production and inventory system for remanufacturing using a System Dynamics simulation modelling approach. The aim is to explore the dynamics of the remanufacturing process and to evaluate system improvement strategies. Specifically, the analysis focuses on the effects of capacity planning and lead times on the system which presents push and pull inventory policies driven mainly by the inventory coverage. The research findings reveal efficiency in the remanufacturing process with higher remanufacturing capacity if the quantity of remanufacturable returns and the remanufacturing lead time are increased and decreased respectively. Moreover, an increase of the production lead time has a higher effect on the system performance than an equivalent increase in the remanufacturing lead time. In addition, we provide a case study both to support these findings and to further validate the developed model.