A simulation study for inventory management policies and its impact on profitability for a product recovery facility
The product returns in a product recovery facility is a stochastic process and also the demand for the retrieved components. Due to variations in the sorting and disassembly yield, the inventory management of the components for the facility has become a challenging issue. In this thesis, the impact of the factors: inventory control limit, baseline inventory, sorting yield and disassembly yield on a product recovery facility was investigated on the performance of a product recovery facility which faces a serious challenge of inventory control, disposal of the product and its components in an environmentally responsible manner and at the same time satisfying the demand of the customers. A hypothetical product recovery facility model is developed using the ArenaTM Simulation software and the Analysis of Variance (ANOVA) of the experimental results is carried out using the SAS® statistical analysis software.
A general product recovery facility consists of operations such as sorting, disassembly, remanufacturing and recycling. Due to the unpredictability of demand and product returns, the inventory levels of the components retrieved from the end of life product have a large fluctuations and also the disposal of the components, which should be minimized due to stringent environmental regulations, there is a need for the inventory policies for a product recovery facility that aims to minimizes the disposal of the components, meet the customer demand and also maintain the required inventory levels, which all contribute towards the profitability of the product recovery facility.