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A Manufacturer-Retailer Inventory Model with Remanufacturing, Stochastic Demand, and Green Investments

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Abstract

This paper develops an integrated inventory model for a closed-loop supply chain (CLSC) system consisting of a manufacturer and a retailer. The demand and the returns of used products are assumed to be stochastic in nature. A carbon tax policy is implemented to cut down the emissions from transportation, production, and storage. To lessen the emissions from the operations, the manufacturer invests in green technologies. In addition, the take-back investment is also done by the manufacturer to increase the number of returned products collected from the market. A mathematical model is proposed to minimize the joint total cost incurred by the supply chain. An iterative procedure is employed to find the optimal values of the number of shipments, amount of investments, safety factor, shipment quantity, and the collection rate. A numerical example and a sensitivity analysis are presented to show the application of the model and to investigate the influence of key parameters on the performance of the model. The results show that by adjusting the production rate flexibly and setting the appropriate level of collection rate, the supply chain can maintain the emissions and cost. Furthermore, the green investment and take-back investment can be used as mechanism to cut down the emissions and to manage the requirement of used product in the production process.

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Authors and Affiliations

  1. Department of Industrial Engineering, Universitas Sebelas Maret, Surakarta, Indonesia

    Wakhid Ahmad Jauhari

  2. Department of Industrial and Systems Engineering, Institut Teknologi Sepuluh Nopember, Surabaya, Indonesia

    Ivan Darma Wangsa

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  1. Wakhid Ahmad Jauhari
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  2. Ivan Darma Wangsa
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Correspondence to Wakhid Ahmad Jauhari.

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Jauhari, W.A., Wangsa, I.D. A Manufacturer-Retailer Inventory Model with Remanufacturing, Stochastic Demand, and Green Investments. Process Integr Optim Sustain 6, 253–273 (2022). https://doi.org/10.1007/s41660-021-00208-0

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  • DOI: https://doi.org/10.1007/s41660-021-00208-0

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