Development of the cascade reuse hybrid manufacturing/remanufacturing system

We propose a cascade parts reuse model for a hybrid manufacturing/remanufacturing environment and address production and environmental issues in a closed-loop supply chain system. We develop an optimal parts ordering policy that minimises total manufacturing costs when manufacturing two grades of products. In the proposed model, total manufacturing costs includes parts ordering cost, products holding cost, and opportunity loss cost. We formulate the ordering quantities of new and reused parts as a newsvendor problem. Through a numerical example, we compare the proposed model with the policy of a company, and confirmed the optimality of the proposed model. We conclude that for a known demand distribution, ordering cost, and holding stock quantity, the proposed optimal ordering policy is more efficient.