Impact of Multiple Sources

Another major characteristic of inventory systems in a Reverse Logistics context as identified in Chapter 6 concerns the presence of multiple, alternative supply sources, namely recovery of used products versus procurement of new ones. In the previous chapter we assumed that the goods return flow directly affects the serviceable inventory and cannot be influenced. Therefore, procurement orders have, in fact, been the only means to control the system. Let us now turn to a more detailed picture of the inbound channel where the recovery of returned products is also a decision variable (see Figure 6.1). To this end, we assume that returned products are collected in a distinct inventory upon arrival. The serviceable stock can then be replenished alternatively by means of procurement or by processing recoverable stock. In addition to lotsizing and safety stock considerations the choice between both sources then becomes an important issue in achieving efficient system performance.