Optimal inventory policies with product reliability information

Abstract

The paper proposes a model for a supply chain system with remanufacturing processes. We use the model to investigate an inventory management strategy where the reliability information of products being used at the customers are integrated into the optimal analysis. The reliability information is characterized by Nelson's Cumulative Exposure (CE) model (Nelson 1990). By doing so, our study shows that a data set of products' failure and install times at the customer side can promote the accuracy of solutions to the optimal policy.