Performance analysis of a hybrid system under quality impact of returns

In this paper we analyze a hybrid system that meets the demand with remanufactured or new products. In the remanufacturing stage there are uncertainties in the quality of remanufactured products, return rates and return times of returned products. These uncertainties affect raw material order quantities, processing times and material recovery rates. In the study returned products are classified by considering quality uncertainties. According to this classification remanufacturing processing times. material recovery rates, remanufacturing costs and disposal costs are determined. In order to analyze the effect of uncertainties in return quality a simulation model is constructed by using the ARENA simulation program. Our analysis denotes that under different cost scenarios quality based classification of returned products brings significant cost savings. The numerical analysis indicates that a cost improvement of more than 8% is achieved when return rates are high. (C) 2007 Elsevier Ltd. All rights reserved.