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Using reverse logistics for failed spare parts : a new opportunity for Vanderlande Industries

Stek, Luuk van (2012) Using reverse logistics for failed spare parts : a new opportunity for Vanderlande Industries.

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Abstract:This thesis is the result of a six months research at Vanderlande Industries in Veghel, the Netherlands. Vanderlande develops, manufactures and maintains automated material handling systems for customers all over the world. Vanderlande faces an increasing amount of last time buy situations. Last time buys occur when a supplier stops producing a part. At that point Vanderlande is offered a last option to purchase enough parts to cover demand until the moment their systems are not used anymore. Due to the possibly long period and different influencing factors, last time buys are associated with high risks. In order to mitigate these risks, parts can be reused by giving them a second life after they fail. This way a different source of supply is created. Currently Vanderlande does not reuse parts, but they are interested in the benefits which this option can realize. Therefore this thesis focuses on the reverse logistic process which needs to be set up in order to realize the reuse option and on the economic feasibility of reusing failed parts. However, since reuse can lead to larger improvements during the steady state compared to the last time buy, the reverse logistic process and economic feasibility are determined under the assumption that the part is still available at the supplier. Therefore the following problem statement has been made: Currently it is unclear how Vanderlande can benefit from repairing broken spare parts. There is no well defined process to accommodate the returning parts and neither a way to determine for which parts reverse logistics is feasible. The first part of the research focused on how the reverse logistic process has to be organized. The most important recommendations towards the organization of the reverse logistic process are: Three strategies are proposed to decide when and how many failed parts should be repaired and new parts be purchased The choice for a strategy can be made on part level depending on the resulting profit and which lead time is acceptable towards the customers. • The re-process to order (RTO) model waits with making a decision on re-processing or purchasing until demand occurs. At that point an order is placed which can cover the demand. This results in long lead times, but low risks and inventory costs. • The push model immediately re-processes failed parts when they are returned. However, it waits with purchasing additional new parts until the inventory level reaches the reorder point. In order to determine the reorder point formulas have been developed for Poisson and compound Poisson distributed demand. The order quantity is determined along an order up to level, which can be calculated with an EOQ type formula. • The pull model postpones both re-processing and purchasing until the inventory position reaches the reorder point. At that time the inventory position is raised to the order up to level, in the first place by re-processing the available failed parts. Additionally new parts are purchased when the re-processed parts are not enough to bring the inventory position to the specified level. For the pull model similar formulas are used for the reorder point and the order up to level as for the push model.
Item Type:Essay (Master)
Clients:
VanDerLande industries
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/62594
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