Abstract

In recent years, increasing environmental concerns, costs of raw materials, and stricter government regulations have resulted in companies striving to reduce their waste materials. An earlier approach adopted was the recycling of materials such as waste paper, glass and metals. However, recycled products typically lose a portion of their added values. Different waste reduction options such as direct reuse, repair, refurbishing, cannibalization, and remanufacturing were studied to overcome this drawback. Remanufacture recaptures the value added to materials when a product was first manufactured.
In the aerospace industry, where safety and performance are the overriding concerns and repairs are highly regulated, it could be perceived that remanufacturing has minimal appeal. However, the very low design tolerance of manufactured components results in a high percentage of defects. Due to the high price of raw materials, remanufacturing and components saving through “transforming” could be applied in imperfect production systems to reduce the amount of scrap materials. In this thesis, a general model is first proposed for a closed-loop supply chain network which includes the following processes: repairs, remanufacturing and transforming of selected defective components and end-of-life products, and cannibalization. A mixed integer linear programming formulation is developed to investigate the effect of various factors on profit, inventory carrying cost, and number of scrap components.
Uncertainty in demand and lead-time is one of the major issues in any manufacturing supply chain. Uncertainty is incorporated into an extended model through the scenario-analysis approach and outsourcing is considered as an option for remanufacturing of the customer owned components. Demand of final products is assumed to be deterministic. The defect rate of disassembled components, however, is considered to be variable which makes the demand for spares to be variable. The lead-time of in-house remanufacturing of the customer owned components is also considered to be variable. Sensitivity analysis is performed to investigate the effect of capacity, inventory carrying cost, outsourcing cost, lead-time, and defect rate variation on profit and amount of scraps. The inventory carrying cost variations have direct effect on the inventory turnover ratio. The maximum capacity of the outsourced company and process costs per unit have significant effect on the profitability. Maintaining a long-term relationship with third-party service providers, designing the components with a longer life cycle, and transforming and remanufacturing of defective components directly impact the profitability over the life cycle of a product.