A joint economic lot size model with returnable transport items

Abstract

The literature on the joint optimisation of order and production quantities typically tries to smooth the downstream flow of materials in a supply chain. Items that are transported in the opposite direction of the flow of finished products have only infrequently been considered. In many practical situations, however, products are transported on pallets or in containers, which may be reused after the final product has been delivered to the end customer. These so–called 'returnable transport items' (RTIs) have to be managed as well to assure that the cost of producing and distributing a product are minimised. To derive insights for the management of RTIs, this paper develops and analyses a model of a supply chain that considers both the downstream flow of materials from the manufacturer to the buyer as well as the circulation of RTIs between both actors.