An integrated vendor-buyer model with sustainability and remanufacturing of returned product

Abstract

With passing time, carbon emission reduction has been a paramount job for human kind. Achieving a delicate balance between carbon emission reduction and the combustion of fossil fuels is essential. This balance is vital as carbon emissions are inevitable during the burning of fossil fuels, which is necessary for industrialization. This study presents an inventory model with green technology where production of new items and remanufacturing of returned items are allowed. Remembering the present global situation, the ordering cost is assumed as variable cost which contains order cancellation and reorder cost. Online order policy is considered with quality of product and a return rate. Keeping in mind the social, economic and environmental aspects, the demand function is considered as sustainability sensitive demand. Remanufacturing is performed for non-serviceable items i.e., defective items which are produced from imperfect production and used items that are purchased from the market. But the products for which remanufacturing cost is more than manufacturing cost are scraped off. In the production process carbon releases from setting up, manufacturing and holding of the perfect items. A nonlinear model is designed based on the above concepts. The model is solved both theoretically and analytically. The main motives of the work are to find the effects of ordering cost, carbon emission cost and green technology investment on the inventory model for suggesting the best policy to the inventory manager. Sensitivity analysis is performed to validate the model. The numerical results prove that ignoring ordering cost, carbon emission cost and green technology investment can lead to a false optimal solution, and this can be a huge economical loss for the inventory manager. The results also prove that a sustainable model with carbon emission and green technology investment is more realistic and profitable in compare with the other existing models. The results show that manufacturer wishes to engage in remanufacturing as remanufacturing cost continuously increases with respect time. Another important finding is that the manufacturer can choose remanufacturing as the cost is lower than manufacturing for saving environment.