Parts Recovery Problem: the Value of Information in Remanufacturing

In several industries, remanufacturing is an important ingredient of the manufacturing strategy. In a typical remanufacturing site, a job shop is responsible for the disassembly of used machines to obtain parts that will be repaired, or whatever operation is necessary to make it perform and look like new. This paper deals with the value of information in this environment. We compare different scenarios where knowledge acquisition happens at different times in the process, gaining insights about the importance of information systems in remanufacturing. Preliminary version. Please, address comments by e-mail to: [email protected] Introduction In several industries, remanufacturing has become an important complement to the production process. Operations researchers have realized this phenomenon and a new stream of research has been developed, covering both operational and strategic issues of remanufacturing. The remanufacturing process changes with the stage in the life cycle of the product. Early in the life cycle, the amount of returns available for disassembly and repair is not sufficient to feed the assembly line with all parts that are necessary, and the process requires the use of new parts. Later in the life cycle, there is a balance between the number of returns and the assembly line needs. When the product is closer to retirement, the supply of used machines for remanufacturing tends to be larger but the outcome of the repair process tends to be less favorable. One of the constraints that differentiate remanufacturing from other types of production is the coordination between two supply functions: the supply of new parts, usually procured from an outside supplier, and the supply of used parts, repaired internally. In a typical remanufacturing site, a job shop is responsible for the disassembly of used machines to obtain parts that will be repaired, cleaned, tuned, polished, painted, tested or whatever operation is necessary to make it perform and look like new. The coordination challenge increases with the yield uncertainty of the disassembled machines. The less we know about the outcome of the repair process, the harder it will be to coordinate the procurement of new parts and the disassembly of used machines for parts recovery. Hence, the knowledge about the repair outcome is a valuable asset but, how much is it really worth? Intuitively, this value is higher when we acquire and use the information in the decision making process. This paper deals with value of information in the remanufacturing site. We compare different scenarios where knowledge acquisition happens at different times in the process, gaining insights about the importance of information systems in this environment.