Inventory Management in a Consumer Electronics Closed-Loop Supply Chain
The goal of this paper is to describe, model, and optimize inventory in a reverse logistics system that supports the warranty returns and replacements for a consumer electronic device. The context and motivation for this work stem from a collaboration with an industrial partner, a Fortune 100 compan...
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| Other Authors: | |
| Format: | Article |
| Language: | English |
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Institute for Operations Research and the Management Sciences (INFORMS)
2019
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| Online Access: | https://hdl.handle.net/1721.1/122357 |
| _version_ | 1826197779920191488 |
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| author | Calmon, Andre P. Graves, Stephen C |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Calmon, Andre P. Graves, Stephen C |
| author_sort | Calmon, Andre P. |
| collection | MIT |
| description | The goal of this paper is to describe, model, and optimize inventory in a reverse logistics system that supports the warranty returns and replacements for a consumer electronic device. The context and motivation for this work stem from a collaboration with an industrial partner, a Fortune 100 company that sells consumer electronics. The reverse logistics system is a closed-loop supply chain: failed devices are returned for repair and refurbishing; this inventory is then used to serve warranty claims or sold through a side sales channel. Managing inventory in this system is challenging because of the short life cycle of these devices and the rapidly declining value for the inventory. We examine an inventory model that captures these dynamics. We characterize the structure of the optimal policy for this problem for stochastic demand and introduce an algorithm to calculate optimal sell-down levels. We also provide a closed-form policy for the deterministic version of the problem, and we use this policy as a certainty-equivalent approximation to the stochastic optimal policy. Finally, using numerical experiments, we analyze the sensitivity of this system to changes in various parameters, and we also evaluate the performance of the certainty-equivalent approximation using data from our industrial partner. Keywords: inventory management; closed-loop supply chains; reverse logistics; sustainability |
| first_indexed | 2024-09-23T10:53:01Z |
| format | Article |
| id | mit-1721.1/122357 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T10:53:01Z |
| publishDate | 2019 |
| publisher | Institute for Operations Research and the Management Sciences (INFORMS) |
| record_format | dspace |
| spelling | mit-1721.1/1223572022-09-27T15:44:24Z Inventory Management in a Consumer Electronics Closed-Loop Supply Chain Calmon, Andre P. Graves, Stephen C Sloan School of Management The goal of this paper is to describe, model, and optimize inventory in a reverse logistics system that supports the warranty returns and replacements for a consumer electronic device. The context and motivation for this work stem from a collaboration with an industrial partner, a Fortune 100 company that sells consumer electronics. The reverse logistics system is a closed-loop supply chain: failed devices are returned for repair and refurbishing; this inventory is then used to serve warranty claims or sold through a side sales channel. Managing inventory in this system is challenging because of the short life cycle of these devices and the rapidly declining value for the inventory. We examine an inventory model that captures these dynamics. We characterize the structure of the optimal policy for this problem for stochastic demand and introduce an algorithm to calculate optimal sell-down levels. We also provide a closed-form policy for the deterministic version of the problem, and we use this policy as a certainty-equivalent approximation to the stochastic optimal policy. Finally, using numerical experiments, we analyze the sensitivity of this system to changes in various parameters, and we also evaluate the performance of the certainty-equivalent approximation using data from our industrial partner. Keywords: inventory management; closed-loop supply chains; reverse logistics; sustainability 2019-10-03T18:14:51Z 2019-10-03T18:14:51Z 2017-04 2015-06 2019-09-27T11:53:31Z Article http://purl.org/eprint/type/JournalArticle 1523-4614 1526-5498 https://hdl.handle.net/1721.1/122357 Calmon, Andre P. and Stephen C. Graves. "Institute for Operations Research and the Management Sciences (INFORMS)." Manufacturing & Service Operations Management (October 2017): 509-712 © 2017 INFORMS en http://dx.doi.org/10.1287/msom.2017.0622 Manufacturing & Service Operations Management Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/ application/pdf Institute for Operations Research and the Management Sciences (INFORMS) Prof. Graves via Shikha Sharma |
| spellingShingle | Calmon, Andre P. Graves, Stephen C Inventory Management in a Consumer Electronics Closed-Loop Supply Chain |
| title | Inventory Management in a Consumer Electronics Closed-Loop Supply Chain |
| title_full | Inventory Management in a Consumer Electronics Closed-Loop Supply Chain |
| title_fullStr | Inventory Management in a Consumer Electronics Closed-Loop Supply Chain |
| title_full_unstemmed | Inventory Management in a Consumer Electronics Closed-Loop Supply Chain |
| title_short | Inventory Management in a Consumer Electronics Closed-Loop Supply Chain |
| title_sort | inventory management in a consumer electronics closed loop supply chain |
| url | https://hdl.handle.net/1721.1/122357 |
| work_keys_str_mv | AT calmonandrep inventorymanagementinaconsumerelectronicsclosedloopsupplychain AT gravesstephenc inventorymanagementinaconsumerelectronicsclosedloopsupplychain |