An environmentally sustainable feasible policy for dynamic lot sizing model with remanufacturing and separate setup costs: time complexity and optimality

We consider a dynamic lot sizing model in which end products to satisfy demands are obtained by remanufacturing m core types of differing quality, where m ≥ 1, or manufacturing from raw materials. In the model, we have separate setup costs associated with manufacturing and remanufacturing. As is widely known, remanufacturing is an environmental preferable choice compared with manufacturing. In view of this, we design a feasible policy for our model that prioritizes remanufacturing over manufacturing. This feasible policy can be found in polynomial time. We argue that the policy does not lead to high total system cost by first analytically showing desirable properties of the policy compared to the optimal policy in total system cost under a reasonable assumption on returns as cores. Then, we consider instances of the model, and numerically compare the cost under the feasible policy with the optimal cost. We also provide numerical results on the speed at which the feasible policy can be found using these instances.