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Decision of optimal incentives and total order quantity with consideration of return rate of remanufacturing product
Journal of The Korea Society of Computer and Information
Abbr :
JKSCI
2011, 16(8), pp.165-176
Publisher : The Korean Society Of Computer And Information
Research Area : Computer Science
2011, 16(8), pp.165-176
Publisher : The Korean Society Of Computer And Information
Research Area : Computer Science
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In this paper, we develop the cost minimization model to select two incentives and total order quantity with consideration of remanufacture company's return incentive. Return rate is sensitive to the incentive that the manufacture company offers. Using a EOQ(Economic Order Quantity) model of a cost minimization, we show concavities of the model about two incentives and total order quantity respectively. According to the proposed algorithm using the concavities, we find out the optimized incentive prices and total order quantity. Through numerical study, we examine sensitive analysis of the incentive price and order quantity for each parameter when the return rate is sensitive to incentive. Company lessens incentive to reduce total price. However, this makes the total price increase due to a diminution of return quantity. We expect that domestic or overseas remanufacture businesses are able to decide optimal incentive and total order quantity by this research.
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