A System Dynamics Model for Reducing Uncertainty in remanufacturing Systems

The management of remanufacturing activities requires new techniques in order to improve these systems for cost optimized operations. However, several factors make the operations of the reverse logistics process difficult. In particular, uncertainties in quantity, quality and timing of returns negatively affect remanufacturing activities such as production planning and inventory control. In this paper, a remanufacturing process model is developed through a System Dynamics approach. The study focuses particularly on selecting and representing the relationships among sensitive factors such as residence time and return index which affect uncertainty on returns rate. The results of the simulation show how these factors can have more influence than an inventory/production strategy for companies involved in remanufacturing. Through the analysis of the total production costs, the results show a considerable increase in cost caused by changing the residence time. This finding suggests that knowledge of customer behaviour and product characteristics can be used to impact on reverse logistics.