Multi-stage product family design for reliability with remanufacturing

This paper develops a two-stage stochastic optimization model to optimize the reliability thresholds for options like reuse, recycling, and remanufacturing in order to minimize the total cost of producing and providing warranty service for a product family. The major uncertainty of remanufacturing decision-making comes from the periodical product demand and quality of returned resources after various usage processes. We assume discrete demand scenarios for each time period and developed a simulation program to estimate the Remaining Useful Life (RUL) of returned resources. The two-stage optimization model can incorporate stage dependency into the decision making so that the remanufacturing decisions will not be myopic.A case study on a product family with different end-of-life options is conducted to illustrate the efficacy of the optimization model. The result shows that the proposed model can help optimize joint manufacturing and remanufacturing decisions considering uncertain demand and usage profiles. With the optimized multi-stage decisions, the manufacture could save the total cost in producing and providing warranty service compared with a fixed manufacturing policy.