Design for optimal quality by recycling returned products

For many manufacturers, the cost of replacing returned products may more than offset the cost of producing parts with a higher quality. This is especially true if good parts from returned products are used to remanufacture aftermarket products. Furthermore, such policy allows for satisfying a customer population with a variable expectation for acceptable quality. In this study, the total cost of supplying a given demand is derived as an analytical function of the targeted primary production rate and product quality when the demand is satisfied with a combination of primary and remanufactured products. The decision variables of this function consist of the primary production rate and the designed product and production quality. This cost is then minimised to determine the production rate and the optimum quality to target. A numerical example is provided and used to demonstrate the application of this function. This example also demonstrates the use of the proposed solution for optimising quality when there is a limit on primary production size. The example also demonstrates the use of the function for optimising service levels. The results show a close match between the theoretical functions developed in this study and those obtained from a Monte Carlo simulation model.