Journal or Book Title
We consider a closed-loop supply chain where new products are produced to order and returned products are refurbished for reselling. The solution to aprice-setting problem enforces the heavy traffic condition, under which we address the production rate control problem for two types of cost functions. Wesolve a drift-control problem for an approximate system driven by a correlated two-dimensional Brownian motion. The solutions to this system are then used to obtain asymptotically optimal control policies. We also conduct a numerical study to explore the effects of different parameters on the optimal production rates and the resulting costs.
Taylor and Francis Inc.
Ghosh, Arka P.; Ryan, Sarah M.; Wang, Lizhi; and Weerasinghe, Ananda, "Heavy Traffic Analysis of a Simple Closed-Loop Supply Chain" (2010). Industrial and Manufacturing Systems Engineering Publications. 30.