Resource downgrading

The aim of this paper is to develop models for managing inventory of resources that can be downgraded for some other purpose after being re-used a number of times and before they are declared unsuitable for their intended purposes. This scenario occurs in several industries including (i) test wafer management in the semiconductor manufacturing where high grade wafers are downgraded to lower grades, (ii) in logistics where a long-range hauling truck is converted to a local hauling truck after a certain mileage, and (iii) without loss of generality resource upgrades such as promotions in personnel management can be treated under the same category of problems as well. The typical decisions are the quantity of resource to purchase, to hold, to scrap and to downgrade at different decision periods. We use a network based structure to formulate the problem.