Joint Optimization of Asset and Inventory Management in a Product–Service System

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2014-01-01
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Wu, Xiang
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Ryan, Sarah
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Industrial and Manufacturing Systems Engineering
The Department of Industrial and Manufacturing Systems Engineering teaches the design, analysis, and improvement of the systems and processes in manufacturing, consulting, and service industries by application of the principles of engineering. The Department of General Engineering was formed in 1929. In 1956 its name changed to Department of Industrial Engineering. In 1989 its name changed to the Department of Industrial and Manufacturing Systems Engineering.
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Abstract

We propose an integrated model of the asset management decisions for a fleet of identical product units and the inventory management decisions for a closed-loop supply chain in the context of a product-service system, in which the two types of decisions are closely coupled. A joint optimization technique is developed to obtain the parameters of the operational policy for the integrated model that minimize the long run average cost rate. A numerical example is provided to illustrate the computational procedures. In addition, the effect of a simplifying assumption that the replaced products have no quality difference is evaluated and the results suggest that as long as the quality difference between the preventively replaced products and failure replaced products is not too big, the simplification to treat them as one category is reasonable.

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The Version of Record of this manuscript has been published and is available in The Engineering Economist 2014, http://www.tandfonline/ 10.1080/0013791X.2013.873844. Posted with permission.

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Wed Jan 01 00:00:00 UTC 2014
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