Sequential and global optimization for a closed-loop deteriorating inventory supply chain

Products such as IC chips, computers and mobile phones can become out of date due to technological innovation. However, these outdated products can be remanufactured and resold to market. In this paper, a closed-loop supply chain inventory system with multi-manufacturing cycles and multi-remanufacturing cycles is analyzed using sequential and global optimization. In the case of sequential optimization, the decision is made initially by the down-stream player, then by the up-stream player. In the case of global optimization, the decision is made jointly by all the players. The supply chain includes a manufacturer, a retailer, a collector and a material supplier. This paper considers out of date as a type of deterioration and generalizes the following three cases: (i) single manufacturing cycle and single remanufacturing cycle, (ii) single manufacturing cycle and multi-remanufacturing cycles, and (iii) multi-manufacturing cycles and single remanufacturing cycle. The analytical results of this study show that a significant increase in the joint profit will result when the integrated policy is adopted. (C) 2010 Elsevier Ltd. All rights reserved.