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A System Dynamics Model for Reducing Uncertainty in remanufacturing Systems

The management of remanufacturing activities requires new techniques in order to improve these
systems for cost optimized operations. However, several factors make the operations of the reverse
logistics process difficult. In particular, uncertainties in quantity, quality and timing of returns
negatively affect remanufacturing activities such as production planning and inventory control. In this
paper, a remanufacturing process model is developed through a System Dynamics approach. The
study focuses particularly on selecting and representing the relationships among sensitive factors
such as residence time and return index which affect uncertainty on returns rate. The results of the
simulation show how these factors can have more influence than an inventory/production strategy for
companies involved in remanufacturing. Through the analysis of the total production costs, the results
show a considerable increase in cost caused by changing the residence time. This finding suggests
that knowledge of customer behaviour and product characteristics can be used to impact on reverse
logistics.