Optimal acquisition and production policy in a hybrid manufacturing/remanufacturing system with core acquisition at different quality levels |
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Authors: | Xiaoqiang Cai Minghui Lai Xiang Li Yongjian Li Xianyi Wu |
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Institution: | 1. Department of System Engineering & Engineering Management, The Chinese University of Hong Kong, Shatin, Hong Kong, China;2. Research Center of Logistics, College of Economic and Social Development, Nankai University, Tianjin 300071, China;3. Business School, Nankai University, Tianjin 300071, China;4. School of Finance and Statistics, East China Normal University, Shanghai 200241, China |
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Abstract: | We study the acquisition and production planning problem for a hybrid manufacturing/remanufacturing system with core acquisition at two (high and low) quality conditions. We model the problem as a stochastic dynamic programming, derive the optimal dynamic acquisition pricing and production policy, and analyze the influences of system parameters on the acquisition prices and production quantities. The production cost differences among remanufacturing high- and low-quality cores and manufacturing new products are found to be critical for the optimal production and acquisition pricing policy: the acquisition price of high-quality cores is increasing in manufacturing and remanufacturing cost differences, while the acquisition price of low-quality cores is decreasing in the remanufacturing cost difference between high- and low-quality cores and increasing in manufacturing and remanufacturing cost differences; the optimal remanufacturing/manufacturing policy follows a base-on-stock pattern, which is characterized by some crucial parameters dependent on these cost differences. |
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Keywords: | Hybrid system Remanufacturing Acquisition management Core quality |
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