Reverse Logistics Inventory Model for Reusable Product Parts

Abstract

Until recently logistics systems supported only processes carried out in classical material flow from producer to final user. Recently it has been a remarkable growth of interest in optimizing logistics processes that supports recapturing value from used goods. The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal is called reverse logistics. Reuse of product parts can bring direct advantages to the company because it reduces costs associated with acquiring new components.
Main goal of this paper is to create the reverse logistics inventory model that uses the reliability theory to describe reusability of product parts with assumption that recovered components are used in a production process but they aren’t as good as new ones. The model allows to estimate the potential profits of the reusing policy in production and inventory management. It gives the base to optimize some of the process parameters: the threshold work time of returns, the warranty period for products containing reused elements or new components order size.