Monte Carlo Simulation: Remanufacturing or not-A Newsvendor perspective

The concept of random yields or uncertain supply is not new in inventory management. While this aspect has been extensively studied in the literature over several decades, the factors impacting uncertain supply have been largely been limited to quality defects, uncertain capacity and sourcing issues. The concept of random yields is very much applicable to the reverse logistics and remanufacturing activities that has received increased attention in recent years. The purpose of this paper is to demonstrate the modeling of the newsvendor problem with uncertain supply via spreadsheet based simulation as a managerial tool for optimizing the performance of a remanufacturing operation.