Optimal control for IERs in reverse supply chain

The reverse supply chain with inspection-error-rates (IERs) under our study consists of two members: remanufacturer and collector. The collector is responsible for collecting the used-products from the end consumers, and inspecting the collected used-products. Owing to technical or non-technical factors, the collector may make inspection errors. In order to decrease the IERs, the collector will add more investment, namely, the unit inspecting cost will increase. In this paper, we focus on the dynamic analysis for reverse supply chain with IERs. The causal loop diagram for the reverse supply chain with IERs is developed using system dynamics methodology. We simulate the impacts of IERs and cost-share-ratio on profits of remanufacturer and collector. Based on the simulation results, the analyses of cost-sharing in the reverse supply chain with IERs are presented: under which conditions the remanufacturer should share the inspection cost with the collector so as to control the IERs.