Group for Research in Decision Analysis

A price-driven production, remanufacturing and waste disposal inventory system: A thermodynamic point of view

Mohamad Y. Jaber Ryerson University, Canada

Many researchers have attempted to bridge their fields with others to gain insight into their own, benefiting from the synergies of such processes. As markets have become increasingly more competitive, disorder has become a prevailing characteristic of modern productive systems operating in complex, dynamic and uncertain environments. Some researchers in the discipline of management science/operational research have applied information theory and entropy approaches to account for disorder when modelling the behaviour of productive systems. However, few have applied classical thermodynamics reasoning to modelling such systems. The research paper postulates that the behaviour of production systems very much resembles those of physical systems. Such a parallel suggests that improvements to production systems might be achievable by applying the first and second laws of thermodynamics to reduce system entropy (or disorder).

Minimizing disorder in these production systems requires stringent control measures by management, with costs that are usually hidden or difficult to estimate. Not accounting for these costs leads to less efficient production systems. The applicability of the first and second laws of thermodynamics is demonstrated in a simple integrated forward-backward supply chain context, where new items of a product are pushed to the market, while used items of the same product are collected and later repaired at some rate. Items that can not be repaired are disposed outside according to some waste disposal rate.

Keywords: Thermodynamics; Entropy cost; EOQ model; production; Repair Waste disposal

References: Jaber, M.Y., Nuwayhid, R.Y., & Rosen, M.A., (2004). Price-driven economic order systems from a thermodynamic point of view. International Journal of Production Research, 42(24), 5167–5184.

Jaber, M.Y., & Rosen, M.A., (2008).The economic order quantity repair and waste disposal model with entropy cost. European Journal of Operational Research, 188(1), 109-120.