PRODUCTION PLANNING IN A THREE-STOCK REVERSE-LOGISTICS SYSTEM WITH DETERIORATING ITEMS UNDER A CONTINUOUS REVIEW POLICY

We consider in this paper a reverse supply chain with three stocks. Newly manufactured items are stored in the first stock. The second stock is reserved for remanufactured items, while the third stock contains the items that are returned from the market. One of our main assumptions is that remanufactured items are not as-good-as-new. We also assume that new and remanufactured items are subject to deterioration and to dynamic demands, that customer return rate is also dynamic, and that the firm adopts a continuous-review policy. Using optimal control theory, we obtain the explicit expressions of the optimal manufacturing rate, remanufacturing rate, disposal rate, and inventory levels in all three stocks. Numerical examples and sensitivity analyses illustrate the results obtained.