Abstract
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 off...
Abstract
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. We find out the optimized incentive prices and total order quantity by using proposed algorithm. 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.
Key words : Return rate, Incentive, Order quantity, Sensitive analysis, Trade off