Optimal Production Planning for a Closed Loop System with Quality Uncertainty of Used Product

The joint acquisition of used products and production planning problem is investigated for a closed loop system, which involves a manufacturing facility and a remanufacturing facility. The return quantity of used products is assumed to be deterministic and price-dependent, but the percentage of the used products that can be remanufactured is random. The demand is uncertain and can be satisfied by the newly manufactured products and the remanufactured products. The objective of the problem is to maximize the expected profit through simultaneously determining the production quantity of new products, the acquisition price of the used products and the quantity of remanufactured products. A mathematical model is presented to formulate the problem, and the numerical example and managerial analysis are reported.