On the Dynamics of Closed-Loop Supply Chains under Remanufacturing Lead Time Variability

Dominguez, Roberto; Cannella, Salvatore; Ponte, Borja and Framinan, Jose M. (2019). On the Dynamics of Closed-Loop Supply Chains under Remanufacturing Lead Time Variability. Omega (Early Access).

DOI: https://doi.org/10.1016/j.omega.2019.102106

Abstract

Remanufacturing practices in closed-loop supply chains (CLSCs) are often characterised by highly variable lead times due to the uncertain quality of returns. However, the impact of such variability on the dynamic benefits derived from adopting circular economy models remains largely unknown in the closed-loop literature. To fill the gap, this work analyses the Bullwhip and inventory performance of a multi-echelon CLSC with variable remanufacturing lead times under different scenarios of return rate and information transparency in the remanufacturing process. Our results reveal that ignoring such variability generally leads to an overestimation of the dynamic performance of CLSCs. We observe that enabling information transparency generally reduces order and inventory variability, but it may have negative effects on average inventory if the duration of the remanufacturing process is highly variable. Our findings result in useful and innovative recommendations for companies wishing to mitigate the negative consequences of lead time variability in CLSCs.

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