| Reverse supply chains focus on recovery of used products from consumers. Products may be returned for a variety of reasons over the product lifecycle. Consider the example of the mobile phone. In the United States, commercial returns occur because some consumers may return their mobile phone to an airtime provider for any reason, e.g., dissatisfaction. Some customers will upgrade their functional phone as new features become available, and these returns become available as end-of-use returns. Other customers return their phones when the airtime provider no longer supports the phone, and these returns become available as end-of-life returns. Depending on the condition of a used product, it is reused as-is, remanufactured to reuse functional components or recycled to reuse materials.;Unlike end-of-life returns that hold little value, commercial and end-of-use returns have significant potential for value recovery. In the United States alone, ;In this dissertation, we study two related problems that build on these insights and that contribute to the literature on profitable recovery and reuse of product returns. First, we consider the design of reverse supply chains for multiple channel1 product returns. We show that the optimal delay until resale of returns determines the choice of design. First, a responsive design, where the focus is on reducing delays, is implemented if delays in the reverse supply chain are greater than optimal. Second, a decentralized design, where preliminary testing of returned is conducted at retailers, is implemented when the value recovered from false failure returns is greater than the handling costs at the retailer. Finally, we explore the impact of returns channel2 for Internet returns. From a customer service perspective, a manufacturer could offer a customer a choice of return location---the retail store or the retail distribution center. From a value recovery perspective, a manufacturer should choose a returns channel that maximizes the net asset value recovered. When delays via both return channels are lower than optimal, the manufacturer must offer the customer a choice. Otherwise, the manufacturer must choose a returns channel with lower delays than optimal.;Second, we consider a manufacturer's capacity decision with product acquisition management in remanufacturing. Motivated by problems at firms such as Xerox, Cummins and GE Transportation, we consider the capacity decision for a firm that faces variability in quantity and quality of used products. The supply of returned units is in variable condition and hence the capacity required for remanufacturing is uncertain. The remanufacturer can fill the demand with units returned upon expiration of lease. If demand exceeds supply of used products or remanufacturing capacity, the firm can fill demand with new products. This research shows how a firm can determine capacity to fill demand with both new and remanufactured products under variability in quantity and quality of used product supply.;In summary, this dissertation seeks to make two contributions to the literature: First, we show how a manufacturer can use optimal delays as a guide to maximize value from the resale of commercial returns. Second, we propose a practical method to determine capacity for remanufacturers facing variability in quantity and quality of used products. The two research streams proposed in this dissertation contribute to the growing discussion on profitability of reverse supply chains in this important and rapidly growing area.;1With multiple channels, products are sold via both retail stores and the Internet. 2A returns channel is the path returns follows from the point of collection to point of testing. |
