Business Case Oce: Reverse Logistic Network Re-Design for Copiers

Abstract

The introduction of extended producer responsibility forces Original Equipment Manufacturers to set up a logistic network for take back, processing and recovery of discarded products. In this paper, we discuss a business case study carried out at Oce, a copier firm in Venlo (NL). It concerns the installment of remanufacturing processes. There is a choice from two locations in Venlo (NL) and one in Prague (Czech Republic), where assignments are subjected to managerial constraints. The study is meant to verify whether the strategic decision of Oce to move remanufacturing activities to the Czech Republic is also economically feasible. We limit ourselves to an optimisation of the HV02-machine network. We follow our general approach, in which we first determine how return products are processed (recovery strategy) and subsequently optimise the reverse logistic network design. We optimise on total operational costs over all possibilities and also compare three pregiven managerial solutions (=network designs) with a Mixed Integer Linear Programming model. Differences in economic costs appear to be very small, hence installing recovery activities in Prague for the HV02-machine must be well motivated from a strategic point of view. Moreover, we argue that besides cost minimisation, Oce should include performance indicators, such as JIT, reliability, in logistic optimisation to support its quality oriented business strategy. In addition, we discuss aspects regarding specific modelling elements in this case situation, the definition of cost functions, the possibility of optimising the forward and reverse logistic network and the use of LP- versus MILP-models in this kind of situations.

Key words: Reverse logistics - Remanufacturing - Copying machines - Oce - Location-allocation - Case-study - Mixed integer linear programming