Title: Diffusion control in closed-loop supply chains: Successive product generations with remanufacturing potential
Büşra Güray, MSc. in Industrial Engineering
Advisor: Asst. Prof. Emre Nadar
Date & Time: June 9, 2023, Friday 15:00
Abstract: We study the sales planning problem of a producer who offers new and remanufactured versions of two successive generations of a durable good. Demand arrives according to the generalized Norton-Bass diffusion process over a finite selling horizon. The remanufactured-item sales are constrained by the available end-of-use returns in each time period for each product generation. We investigate whether the producer can profit from partially satisfying the new-generation product demand to smooth out the new-generation diffusion curve and increase the total remanufactured-item sales in the long run. We show that the partial-fulfillment policy is optimal for fast-clockspeed products if (i) the profit margin ratio of the remanufactured item to the new item is large enough for the new-generation product, (ii) the profit margin ratio of the early-generation new item to the new-generation new item is high enough, (iii) the remanufactured-item demand exists but is only moderately large, and (iv) the remanufactured-item demand from the customers initially attracted by the early-generation product is not too large. We also characterize the environmentally critical time period beyond which the optimal initiation of partial demand fulfillment leads to no improvement in the total remanufacturing volume for the new-generation product.