MANAGING PRODUCT RETURNS FOR REMANUFACTURING

Firms are often encouraged to offer environmentally friendly products as a demonstration of corporate citizenship. However, this may prove to be an unrealistic expectation since a rational firm will only engage in profitable ventures; those that increase shareholder wealth. We develop a framework for analyzing the profitability of reuse activities and show how the management of product returns influences operational requirements. We show that the acquisition of used products may be used as the control lever for the management and profitability of reuse activities. These activities, termed product acquisition management, affect several important business decisions. First, if a firm is to pursue reuse activities, these reuse activities must be value‐creating. Second, if a firm is to compete by offering remanufactured products, then we show how product returns management influences the overall profitability of such activities via a trial and error EVA approach. Third, we show how operational issues are strongly affected by the approach used to manage product returns. There is a need for future research specifying the mathematical relationship between acquisition price and the nominal quality of the returned product.     

INVENTORY RATIONING AND SHIPMENT FLEXIBILITY ALTERNATIVES FOR DIRECT MARKET FIRMS

This paper investigates inventory‐rationing policies of interest to firms operating in a direct market channel. We model a single product with two demand classes, where one class requests a lower order fulfillment lead time but pays a higher price. Demand for each class follows a Poisson process. Inventory is fed by a production system with exponentially distributed build times. We study rationing policies in which the firm either blocks or backlogs orders for the lower priority customers when inventory drops below a certain level. We compare the performance of these rationing policies with a pure first‐come, first‐serve policy under various scenarios for customer response to delay: lost sales, backlog, and a combination of lost sales and backlog.     

A SIMULATION GAME FOR TEACHING SERVICE‐ORIENTED SUPPLY CHAIN MANAGEMENT: DOES INFORMATION SHARING HELP MANAGERS WITH SERVICE CAPACITY DECISIONS?*

For decades, the Beer Game has taught complex principles of supply chain management in a finished good inventory supply chain. However, services typically cannot hold inventory and can only manage backlogs through capacity adjustments. We propose a simulation game designed to teach service‐oriented supply chain management principles and to test whether managers use them effectively. For example, using a sample of typical student results, we determine that student managers can effectively use end‐user demand information to reduce backlog and capacity adjustment costs. The game can also demonstrate the impact of demand variability and reduced capacity adjustment time and lead times.     

THE IMPACT OF ELECTRONIC DATA INTERCHANGE ON DELIVERY PERFORMANCE

After several years of use of electronic data interchange (EDI) in various industries, the literature is still inconclusive regarding the benefits gained from its usage. We investigated contextual factors of two types: non‐managerial (product diversity, product customization, production instability, and organizational size) and managerial (just‐in‐time and quality management), that might have confounded past results. Our results indicate that the extent of EDI use is significantly related to delivery performance after controlling for the above‐mentioned factors. Furthermore, the data set supported the moderating effect of production instability on the relationship between the extent of EDI use and delivery performance achieved, but failed to support the moderating effect of organizational size.     

THE MARKET SHARE IMPACT OF SERVICE FAILURES

This paper develops a simple but powerful model that relates service satisfaction/dissatisfaction to market share. The model is based on an intuitive service satisfaction framework that relates three service system parameters (service success rate, complaint rate, and service recovery rate) to the percent of satisfied customers. A dynamic model is then posited that relates the defection rate and the addition rate to market share changes. The service satisfaction/market share model yields useful insights into how market share is influenced by these service system parameters. The surprisingly simple model predicts changes in market share due to changes in customer satisfaction.     

COMPONENT COMMONALITY: MODELS WITH PRODUCT‐SPECIFIC SERVICE CONSTRAINTS*

Common components are used extensively for reasons including product postponement and expediting new product development. We consider a two‐stage assemble‐to‐order system with two products having uniformly distributed demand, one common component, and product‐specific components. We develop optimization models in which the cost‐minimizing inventory of the components must be determined and allocated to products in order to meet product‐specific service level constraints. We compare two different commonality models based on whether or not the products are prioritized. A distinctive feature of our study is the use of product‐specific service levels. We compare our results with models using aggregate service levels.     

A SINGLE-MACHINE SCHEDULING MODEL WITH FIXED-INTERVAL DELIVERIES

We consider an environment where a production facility modeled as a single machine needs to assign delivery dates to several orders and find a feasible sequence. Tardy jobs are not allowed. The delivery dates are to be at prespecified fixed intervals. The objective is to minimize the due date penalty and the cost of earliness. We provide a dynamic programming-based solution procedure that runs in polynomial time. We develop several dominance results that reduced the computational requirement by an order of magnitude in our computational study.     

INTRODUCTION: SHAPING THE FUTURE OF MANUFACTURING AND SERVICE OPERATIONS

The challenges and opportunities in production and operations management (POM) are almost unlimited because in the world economy, manufacturing andservice operations account for more than 10 trillion dollars per year and in any single industry, the performance varies widely from country to country and from organization to organization. The goal of Production and Operations Management is to contribute to improving the management of manufacturing and service operations all over the world. The editors and reviewers judge the papers published in the journal for their contribution to improving of business practices and to further closeness between research and practice. The journal will publish high quality papers on a broad range of topics in POM, and it encourages all paradigms, old and new. We also invite managers from around the world to describe specific POM problems that provide challenging opportunities for academic research.     

A PAVEMENT MANAGEMENT DECISION SUPPORT SYSTEM

We present a pavement management expert system developed by the University of Wisconsin-Madison and implemented within a geographical information system for the Wisconsin Department of Transportation. The system uses pavement data regularly collected on the state's 12,000 miles of highway to assist engineers, planners, and budget analysts' management decisions about pavements to be included in 6-year improvement and 3-year maintenance programs. The system has a three-layer architecture. The lowest level suggests treatments for each of a large number of small segments of highway. The middle layer aggregates segments, suggests alternative treatments, and estimates the cost of each. The top layer prioritizes the projects and incorporates them into intermediate-range plans. The geographical information system environment enables integration of existing databases within the system using a topologically structured geographic database and specialized software.     

IMPLEMENTING INITIATIVES ON QUALITY: AN INTRODUCTION TO THE SPECIAL ISSUE ON TOTAL QUALITY MANAGEMENT

In the early 1980s, companies around the world, learning from the Japanese experience, saw that they could address their severe competitive problems related to productivity and quality only by looking at the entire set of processes and organizational relationships in the context of the customer's needs. This approach was termed total quality management (TQM). As companies pursue quality-related initiatives, they must deal with a number of issues; some of these issues are addressed here: measurement of benefits, feedback and recognition, work-teams, teaching continuous improvement, and enhancing the effectiveness of statistical process control charts.