Table Of ContentLecture Notes in Economics
and Mathematical Systems 501
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Moritz Fleischmann
Quantitative Models for
Reverse Logistics
Springer
Author
Dr. Moritz Fleischmann
Rotterdam School of Management
FacuIteit Bedrijfskunde
Erasmus University Rotterdam
Burgemeester Oudlaan 50
3000 DR Rotterdam
The Netherlands
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Fleischmann, Moritz:
Quantitative models for reverse logistics / Moritz Fleischmann. -
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Milan ; Paris; Singapore; Tokyo: Springer, 2001
(Lecture notes in economics and mathematical systems ; 501)
ISBN 978-3-540-41711-8 ISBN 978-3-642-56691-2 (eBook)
DOI 10.1007/978-3-642-56691-2
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ISBN 978-3-540-41711-8
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Acknowledgement
The material presented in this monograph is a result of my work as a PhD
student at the Rotterdam School of Management / Faculteit Bedrijfskunde
at the Erasmus University Rotterdam in the period of 1996-2000. One of
the pleasant things about completing a project like this is to have an op
portunity to thank those who have been contributing to its coming into life.
I am indebted to many individuals for their support, inspiration, and en
couragement, which have made the past four years such a rich experience to
me.
First of all, I would like to thank my promotors Jo van Nunen and Rom
mert Dekker for their confidence and support. Jo has been a great boss to
whom I am grateful for creating an excellent working environment and for
his continuous spurs to diverge from traditional perspectives. Rommert's en
thusiasm and commitment have been an example which I am determined to
remember in my future path in research. In the same breath, I would like to
thank Roelof Kuik for all the time and patience he put into accompanying
and advising me in my research. Countless 'blazing through'-sessions ranging
from Markov decision theory to Dutch politics have been a main flavouring
of my time as a PhD student.
Furthermore, I am grateful to Luk Van Wassenhove for his valuable advice
throughout the past four years and for giving me the opportunity to spend a
research visit at INSEAD. I am indebted to Marc Salomon for inviting me to
Rotterdam and for introducing me to the research area of Reverse Logistics
and product recovery management.
A joint study with IBM has been an essential element of my research
project. I would like to thank all colleagues at the International Maintenance
Parts Logistics department in Amsterdam for their support and their pleasant
co-operation. In particular, I am grateful to Doron Limor for giving me the
opportunity to investigate Reverse Logistics practice at IBM and for his open
minded manner of co-operation.
In the same vein, I thank all colleagues I have had the privilege to work
together with. In particular, exchange with members of the REVLOG net
work has been a great opportunity. Based on this experience, I have perceived
co-operation and the exchange of ideas as some of the most attractive facets
of scientific research.
It goes without saying that a sound 'home base' is invaluable in providing
a pleasant and fruitful working environment. Therefore, I would like to thank
all colleagues at the Department of Decision and Information Sciences, my
fellow PhD candidates at the Rotterdam School of Management / Faculteit
Bedrijfskunde, and our friends in Rotterdam and elsewhere in The Nether
lands. It is the warm welcome and the many personal relations that have
made the past four years such a pleasant experience and that have rendered
the notion 'abroad' almost insignificant.
At the same time, I am grateful to my family and friends in Germany
for their lasting interest and friendship even across the longer geographical
distance. In particular, I thank my parents for their continuous care and
support that I could always rely on.
Most of all, however, I thank my wife Birgit, for her love and confidence
and for making 'Rotterdam' our common endeavour from the very beginning
on. I dedicate this book to her.
Rotterdam, December 2000 Moritz Fleischmann
to Birgit
Contents
Part I. Reverse Logistics: An Introduction
1. Introduction.............................................. 3
1.1 Scope and Definition of Reverse Logistics. . . . . . . . . . . . . . . . . . 5
1.2 Research Goals and Methodology. . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3 Outline of this Monograph. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2. Reverse Logistics at IBM: An Illustrative Case . . . . . . . . . .. 11
3. Structuring the Field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17
3.1 Dimensions of the Reverse Logistics Context. . . . . . . . . . . . . .. 17
3.2 Categories of Reverse Logistics Flows ..................... 19
3.3 Literature Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 24
3.3.1 General Reverse Logistics Issues. . . . . . . . . . . . . . . . . . .. 25
3.3.2 Marketing Channels for Reverse Logistics Flows. . . . .. 30
3.3.3 Production and Operations Management Issues ...... 31
Part II. Reverse Logistics: Distribution Management Issues
4. Product Recovery Networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 37
4.1 Introduction to Reverse Distribution . . . . . . . . . . . . . . . . . . . . .. 37
4.2 Evidence from Current Practice . . . . . . . . . . . . . . . . . . . . . . . . .. 38
4.3 Recovery Network Characteristics ........................ 43
4.3.1 Commonalities of the Surveyed Business Cases. . . . . .. 43
4.3.2 Comparison with Other Logistics Networks. . . . . . . . .. 47
4.4 Classification of Recovery Networks. . . . . . . . . . . . . . . . . . . . . .. 50
4.4.1 Dimensions of the Network Context. . . . . . . . . . . . . . . .. 50
4.4.2 Product Recovery Network Types .................. 52
4.5 Vehicle Routing Issues .................................. 56
5. A Facility Location Model for Recovery Network Design.. 59
5.1 Recovery Network Design Models in Literature. . . . . . . . . . . .. 59
5.2 A Generic Recovery Network Model ...................... 64
5.3 Examples.............................................. 69
X Contents
5.3.1 Example 5.1: Copier Remanufacturing. . . . . . . . . . . . .. 70
5.3.2 Example 5.2: Paper Recycling. . . . . . . . . . . . . . . . . . . . .. 73
5.4 Parametric Analysis and Network Robustness. . . . . . . . . . . . .. 75
5.5 Extensions............................................. 80
Conclusions of Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 85
Part III. Reverse Logistics: Inventory Management Issues
6. Inventory Systems with Reverse Logistics ................ 89
6.1 Exemplary Business Cases. . . . . . . . . . . . . . . . . . . . . . .. . . .. . .. 90
6.2 Characteristics of Recoverable Inventory Management. . . . . .. 93
6.3 A Review of Inventory Models in Reverse Logistics ......... 95
6.3.1 Deterministic Models. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 95
6.3.2 Stochastic Periodic Review Models ................. 98
6.3.3 Stochastic Continuous Review Models ............... 101
7. Impact of Inbound Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
7.1 A Basic Inventory Model with Item Returns ............... 106
7.2 The Unit Demand Case ................................. 107
7.3 General Demand Case: Analysis of the Cost Function ....... 114
7.4 General Demand Case: Optimal Policy Structure ........... 119
7.5 Numerical Examples .................................... 123
7.6 Extensions ......................... ·. ................... 129
8. Impact of Multiple Sources ............................... 133
8.1 Tradeoffs Between Recovery and Procurement .............. 133
8.2 The Capacity Aspect of Product Returns .................. 135
Conclusions of Part III ....................................... 139
Part IV. Reverse Logistics: Lessons Learned
9. Integration of Product Recovery into Spare Parts Manage-
ment at IBM ............................................. 143
9.1 The Current Dismantling Process ......................... 143
9.2 Logistics Alternatives for Integrating Dismantling .......... 146
9.2.1 Design of the Dismantling Channel ................. 146
9.2.2 Dismantling Decision Rule ......................... 147
9.2.3 Co-ordination with Other Sources .................. 148
9.3 Performance of Alternative Planning Approaches ........... 149
9.3.1 A Simulation Model .............................. 149
9.3.2 Numerical Results ................................ 153
9.4 Recommendations ...................................... 158
10. Conclusions ............................................... 161
Contents XI
List of Figures ................................................ 166
List of Tables ................................................. 168
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
