Component remanufacturing: a new prospective profitable business approach for the Indian automobile sector
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Component remanufacturing: a new prospective profitable business approach for the Indian automobile sector Malolan Sundararaman2 · Mathirajan Muthu1 Accepted: 7 May 2020 © Operational Research Society of India 2020
Abstract In the last 60 years, remanufacturing has evolved as the major way for recovering value from products or components of the product, because the remanufactured product or component is not only cheaper than those obtained from conventional sources of manufacturing and/or purchasing, but the outputs are also “good-as-new”. The automobile sector, in particular, has seen predominant remanufacturing. Given the benefits of remanufacturing, this study proposes a new prospective business approach, particularly for the Indian automobile sector by introducing component remanufacturing. Particularly this study considers Multiple Products (MP) that are assembled by proposing Component Remanufacturing (CR) as a new source along with regular manufacturing and purchasing sources for components. In addition, this study considers the complexities of “Backordering (BO)” along with a new proposal for “Product Substitution (PS)” option to satisfy demand. Hence, the research problem considered in this study is referred as “MP-CR problem with BO&PS”. For this complex and new problem, the study empirically demonstrates that the MP-CR problem with BO&PS is a new prospective profitable business approach in comparison with the existing “Multi Products problem with Backordering (MP problem with BO)” for an Indian automobile OEM, by proposing a mathematical model with the objective of profit maximization. Keywords Inventory and production · Component remanufacturing · Product substitution · Backordering · Non-linear programming Electronic supplementary material The online version of this article (https://doi.org/10.1007/s1259 7-020-00457-6) contains supplementary material, which is available to authorized users. * Malolan Sundararaman [email protected] Mathirajan Muthu [email protected] 1
Department of Management Studies, Indian Institute of Science, Bengaluru 560 012, India
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Department of Management Studies, Nathional Institute of Technology Tiruchirappalli, Tiruchirappalli 620 015, India
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1 Introduction In India, legislations are coming into force with the aim of reducing pollution. An important target sector is the automobile sector. One of the first legislations imposed on the automobile sector was in New Delhi. This first legislation was the ban on using diesel vehicles, which were more than 10 years old [26]. In the most recent legislation, the sale of Bharat Stage-III (BS-III) engines was banned by the Honourable Supreme Court of India from 1st April 2017 [19] because of their sensitive emissions, in comparison to the latest BS-VI engines. However, the recent estimate indicates that various OEM in India hold nearly 0.8 Million vehicles with BS-III engines in inventory [19]. Furthermore, more than 190 Million vehicles with BS-III or older engines are still in use by cus
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