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A unified theory of the dynamics of closed-loop supply chains

Hosoda, Takamichi and Disney, Stephen M. 2017. A unified theory of the dynamics of closed-loop supply chains. European Journal of Operational Research 269 (1) , pp. 313-326. 10.1016/j.ejor.2017.07.020

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We investigate the dynamics of a closed-loop supply chain with first-order auto-regressive (AR(1)) demand and return processes. We assume these two processes are cross-correlated. The remanufacturing process is subject to a random triage yield. Remanufactured products are considered as-goodas- new and used to partially satisfy market demand; newly manufactured products make up the remainder. We derive the optimal linear policy in our closed-loop supply chain setting to minimise the manufacturer’s inventory costs. We show that the lead-time paradox can emerge in many cases. In particular, the auto- and cross-correlation parameters and variances of the error terms in the demand and the returns, as well as the remanufacturing lead time, all influence the existence of the lead-time paradox. Finally, we propose managerial recommendations for manufacturers.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Uncontrolled Keywords: Supply Chain Management, Closed-loop Supply Chain, Vector Auto-Regressive Process, Order-Up-To Policy, Random Yield
Publisher: Elsevier
ISSN: 0377-2217
Funders: JSPS KAKENHI Grant Number 25380475
Date of First Compliant Deposit: 2 July 2017
Date of Acceptance: 2 July 2017
Last Modified: 08 Jul 2020 09:45

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