Optimal Uncertainty Decision of Innovation Products Output Based on Return Collection

Abstract EN

As the length of time between product renewals decreases, the enterprises that make innovative products face new challenges.

The production cost structure of innovative products can be changed by collecting product returns, which can be economically valuable for enterprises.

Enterprises face both production and demand randomness; hence, it is important to improve the traditional optimal production decision-making model that considers the randomness of demand only.

This paper divides innovative products into structural innovation products and improved innovation products.

The paper studies the optimal single-period production decision between reused parts and conventional new parts in complementary and substitute relationships.

It further gives the analytical expressions for satisfying the optimal production and provides some numerical examples.

The research results indicate that when producing innovative products, whether based on structural or improved innovation, with the variance of the quantity of the recycled parts increasing, the optimal purchase quantity of the conventional parts will increase but the expected profits for the innovative products will decrease.

With integrated substitution and complementation based on improved innovation, enhancing the fluctuation in the number of recycled parts has a greater impact on the optimal purchase quantity of the substitute conventional parts than that of the complementary parts.