Hybrid manufacturing and remanufacturing lot-sizing problem with stochastic demand, return, and setup costs

Pedro Belluco Macedo, Douglas Alem*, Maristela Santos, Muris Lage Junior, Alfredo Moreno

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


This paper presents mixed-integer programming models to hybrid manufacturing and remanufacturing lot-sizing problems in which remanufactured products are treated as new ones, so that both manufactured and remanufactured products compete to meet the demands. Differently from previous studies, we consider an environment with multiple products, both manufacturing and remanufacturing costs, disposal, backlogging, and the inherent uncertainties of demands, return rates of usable products, and setup costs. In order to deal with these uncertainties, we propose a scenario-based two-stage stochastic programming model that assumes production and setup as first-stage decision variables, whereas inventory, disposal, and backlogging are defined as second-stage decision variables. We also analyze a risk-averse model in an attempt to reduce the dispersion of the second-stage costs. The main results of the present study indicate that setup costs for remanufacturing can be decisive in choosing between manufacturing or remanufacturing. Even though remanufacturing costs are lower, the process is still largely dependent on return rates and low storage costs for returned products.

Original languageEnglish
Pages (from-to)1241-1257
Number of pages17
JournalInternational Journal of Advanced Manufacturing Technology
Issue number5-8
Early online date2 Jul 2015
Publication statusPublished - 1 Feb 2016


  • lot sizing
  • mean risk
  • remanufacturing
  • risk aversion
  • two-stage stochastic programming

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