Track: Inventory Control and Management

Abstract

With the launch of e-commerce, market has experienced steady surge in consumer durables but it has shortened product life cycle due to rapid changes in features and capabilities. Refurbished items can generate additional revenue for the company while two major drawbacks could be, first, reduced future demand for the newer products and second capacity limitations of the manufacturers. Manufacturers always have inventory holding and sales constraints and additional accumulating inventory of returned product can be difficult to carry over to next periods. This creates a problem of optimal launch of refurbished products to effectively use the capacity limitation without influencing the sales of newly launched products. We propose to formulate an optimization model to find market launch time of refurbished products constrained over profit and capacity by three steps. First an analysis of the time series distribution is done to depict its influence over sales. Secondly, using Bass Diffusion Model as a base form for the sales distribution a convolution of sales curve is presented stating the time and capacity at which the refurbished products needs to be released into the market. Finally, a forecasting method is presented to determine the inventory holding capacity at instantaneous time depending on the market demand.