Inventory decisions in a two-echelon system with remanufacturing, carbon emission, and energy effects

In this study, we propose an inventory model consisting of a depot and a distributor with environmental and finite remanufacturing generations considerations. Investigation of the environmental effects is done by examining how carbon emissions and energy consumption for both transportation and production affect the model's optimal solution. In the system, the depot fulfils demand at the distributor through ordering new products from outside supplier and remanufacturing used items that are returned from the market. We build the joint annual inventory cost function and find its minimum value by determining the optimal value of shipment lot size, number of shipments per year, and the number of remanufacturing generations. The results show that the proposed model gives benefit to the depot and the distributor, respectively. Optimizing the inventory related costs and the environmental costs actually provides less remanufacturing generations. In the other hand, higher amount of solid waste disposal and carbon emissions will be generated yet lower amount of energy is consumed. This study also showed that the joint total cost can be reduced by increasing the number of used items collected from the market.