Optimal control of reassembly with variable quality returns in a product remanufacturing system

We consider the assembly system of modular products in the remanufacturing environment subject to used module returns with uncertainties in terms of timing, quantity and quality. n customer demand classes of remanufactured products are classified by l = 1,…,n levels of product quality. Returned modules arrive according to a compound Poisson process and each demand class follows an independent Poisson process. Returned modules can be stocked for reassembly upon demand requests, but incur a holding cost. We formulate the problem as a Markov decision process and show that the reassembly and inventory control policy is a state-dependent threshold type policy.