CONFIDENTIAL. Limited circulation. For review only.

Quality, Reliability, Maintenance Issues in

Closed-Loop Supply Chains: A Review
S. Bhakthavatchalam, C. Diallo, U. Venkatadri ∗ A. Khatab ∗∗
∗
Dalhousie University, Industrial Engineering, Halifax NS CANADA
(sr788330@dal.ca, cd@dal.ca, uday.venkatadri@dal.ca).
∗∗
Ecole Nationale des Inegenieurs, Metz, FRANCE (khatab@enim.fr)

Abstract: The collection and recovery of end-of-life products has been a very successful
research area especially around the design of reverse logistics and remanufacturing processes.
Unfortunately, there is very little work on the issues of quality, reliability, maintenance &
warranty for these recovered products and the remanufacturing activities that will take them
to their subsequent lifecycles. This paper reviews recent and relevant literature on quality,
reliability, maintenance and warranty problems in closed-loop supply chains with a focus on the
remanufactured or second-hand products. A variety of mathematical tools and techniques used
in the literature are mapped to the main issues considered. The findings are summarized, and
the main research issues and opportunities are highlighted.

Keywords: Remanufacturing, Refurbishing, Reuse, Quality, Reliability, Maintenance, Warranty.

1. INTRODUCTION (see Chari et al. (2014)). According to Parkinson and

In the past decade, a large quantity of research work was
published on Green supply chain management (GSCM)
covering mainly the aspects of logistics, optimal inventory
control policies for returned products and recovered parts,
remanufacturing production planning, and supply chain
design decisions. However, key areas areas such as quality,
reliability, maintenance engineering and warranty poli-
cies for remanufactured systems or second-hand products
(SHP) have been ignored. The reliability of the products
recovered is an important factor in the remanufacturing
decisions to be made. Once refreshed, the product or part
will have to survive a second lifetime and be required to
provide the consumer with a decent performance level. The
maintenance and warranty policies to be implemented and
offered also have to be carefully determined and matched
to the refreshed product’s reliability. Where one can find
thousands of models on closed-loop supply chain models
dealing with SHP, Shafiee and Chukova (2013b) have
found that, ‘in contrast with the vast literature on new
products, a brief review shows that only a few researchers
have worked on developing models to jointly determine
the optimal warranty policy, the upgrade strategy (as an
engineering issue to reduce warranty servicing cost), and
sale price (as a competitive tool in marketing strategy) of a
SHP to maximize the dealer’s expected profit. This paper
reviews recent and relevant literature on quality, reliability,
maintenance and warranty problems in closed-loop supply
chains with a focus on the remanufactured or SHP. A
variety of mathematical tools and techniques used in the
literature are mapped to the main issues considered. The
findings and interpretations are summarized, and main
research issues and opportunities for future research work
are highlighted. Remanufacturing is the process of restor-
ing used products to like-new conditions by disassembly,
cleaning, repairing and replacing parts, and reassembly
Thompson (2003), the aim of remanufacturing is to re-
process used products in such a manner that the quality
of the products is as good or better than new in terms
of appearance, reliability and performance. Various other
definitions of remanufacturing exist in the literature (see
Parkinson and Thompson (2003)). Remanufactured sys-
tems are commonly regarded as having lower quality when
compared to original equipment but this is not always
the case as reported by Parkinson and Thompson (2003).
In order to stimulate the demand for remanufactured or
SHP, remanufacturers, dealers/brokers use a combination
of initiatives to promote and infer the quality of their prod-
ucts. These initiatives include significant price reductions,
generous warranty coverage, free preventive maintenance
(PM) on top of the upgrade and repair activities that take
place during remanufacturing.
2. LITERATURE REVIEW
The objective of this paper is to identify major research
peer-reviewed publications dealing with quality, reliabil-
ity, maintenance and warranty models for SHP. This re-
view focuses upon books, peer-reviewed conferences papers
and journal papers published after 1985. Most academic
research databases such as Engineering village (Com-
pendex), Proquest, Google Scholar were queried using
some important keywords such as ‘second-hand’, ‘recondi-
tioned’, ‘refreshed’, ‘remanufactured’ in combination with
‘upgrade’, ‘warranty’, ‘maintenance’, ‘reliability’, ‘models’.
The articles obtained were classified using both their prob-
lem context and methodology context (See table 1). The
bibliographic formatting used by this publication does not
allow for a numbered reference list. Thus, in order to keep
the mapping table small, we added a numerical label [..] at
the end of each publication to be used for cross-referencing
between the table and the references.

Preprint submitted to 15th IFAC Symposium on Information Control

Problems in Manufacturing. Received January 5, 2015.
 CONFIDENTIAL. Limited circulation. For review only.
2.1 Classification Based on Problem Context
Quality models: Behdad and Thurston (2011) proposed
a model to evaluate the stochastic variability in the quality
of returned components. Dindarian et al. (2012) evaluated
microwave ovens discarded in the United Kingdom to
determine the quality of the discarded products failures
and quality levels. Guide Jr et al. (2003) developed a
framework including a heuristic nonlinear programming
approach to maximize the profitability of cellular tele-
phone recycling program. The profitability varies accord-
ing to the quality and quantity of the returned product and
on the demand for remanufactured phones. Shrivastava
et al. (2005) proposed a decision making system which
uses material contents and quality levels to reach a rat-
ing score. Galbreth and Blackburn (2006) developed an
optimal acquisition and sorting policy. In order to reduce
the uncertainty in quality, a stochastic algorithm is used
to minimize the acquisition cost and for sorting the prod-
ucts. Pokharel and Liang (2012) developed an acquisition
policy for a consolidation center to maximize their profit
while meeting the price quantity and quality levels set
by a remanufacturer. Nikolaidis (2009) proposed a mixed
integer programming model for the optimal acquisition of
products for remanufacturing purposes. Radhi (2012) pro-
posed a mixed integer nonlinear program to maximize the
expected profit by using less resources and optimal mini-
mum quality products to meet multiple markets demand.
Their results indicated that the increase of uncertainty
in quality and demand reduces the profit. Vorasayan and
Ryan (2006) formulated an open queueing network model
to minimize the cost of refurbishing operations and to
maximize the manufacturers expected profit. Zikopoulos
and Tagaras (2007) studied the impact of uncertainty in
quality of the returned products on refurbishing actions.
Huang (2010) investigated incentive policies offered for
returns using Stacklebergs game theory models.
Reliability models: Huang and Askin (2003) performed
a reliability analysis of electronic devices with multiple
competing failure modes including aging induced perfor-
mance degradation. Mazhar et al. (2007) proposed a neural
network model to determine the remaining life of electric
motors in washing machines. Jiang and Guo (2014) de-
veloped a non-parametric method to estimate the failure
intensity function of repairable products which can be used
in the assessment and analysis of product sustainability.
Aksezer (2011) used regression analysis to determine the
reliability of second-hand cars from manufacturers per-
spective. Kara et al. (2005) proposed a multicriteria deci-
sion making model to estimate the remaining life of prod-
ucts. Pochampally and Gupta (2004) developed a Bayesian
updating process to be used during the grading process. It
also tracks the quality and reliability of the product and
helps to minimize human errors. To estimate the lifecycle
costs and replacing requirements of parts, Jiang et al.
(2000), Jiang et al. (1999) developed a reliability model
for a population of systems undergoing remanufacture and
studied the replacement rate behavior in this population.
Shu and Flowers (1998) estimated the lifecycle cost of re-
manufacturing used systems and conducted an experiment
on a mechanical gear system. Diallo et al. (2014) derived a
cost optimal mixing strategy and studied the behavior of
the failure rate of a lot composed of new and reconditioned
Preprint submitted to 15th IFAC Symposium on Information Control
Problems in Manufacturing. Received January 5, 2015.
parts. Murayama and Shu (2001) designed a reliability
model for product reuse without repair. Time to failure
and quality deterioration data are used to simulate the
material flow all through the product lifespan. Kim and
Park (2013) proposed an integrated data system based on
a RFID technology to provide useful data that can be used
to make remanufacturing more efficient.
Maintenance models: Maintenance is defined as a series
of actions taken during the use of a product to enable
it to the function at predetermined levels during its eco-
nomic lifetime (Parkinson and Thompson (2003)). Because
of their potential lower reliability, SHP need appropriate
maintenance models. Ait-Kadi et al. (1990) developed a
block replacement policy (BRP) relying on old compo-
nents for replacements. Yeh et al. (2011) developed two
PM strategies: one with fixed maintenance degree and
the other with an age threshold. Numerical results show
that PM reduces the total expected cost and increases the
profit. Pongpech et al. (2006) proposed an optimal upgrade
and PM strategy for SHP under lease. They suggest to
upgrade before leasing. In addition, PM lowers the failure
rate and total expected cost. Sheu and Griffith (2002) ex-
tended the BRP with shock models. Boudhar et al. (2014)
developed a new dynamic heuristic for the optimization
of opprotunities to use new and remanufactured spare
parts in a context of stochastic degradation. Shafiee and
Chukova (2013a) proposed a taxonomy scheme to classify
maintenance and warranty models.
Remanufacturing models
Disassembly / replacement: Remanufacturers get their
inventory of spares through the disassembly of failed prod-
ucts. Improper design leads to more wastage and electronic
products with minor faults are not reused (Dindarian
et al. (2012)). Proper design helps disassembly of failed or
returned products which leads to better reuse. Shrivastava
et al. (2005) proposed a decision making system to opti-
mize the disassembly strategy. Their system helps the re-
manufacturers to assess the time duration of the recycling
process. Propst and Griffin (2000) developed a reliability
assessment model for the remanufacturing of oil circuit
breakers. Chari et al. (2014) proposed a framework for
sustainable product life-cycle in remanufacturing. Their
review showed that very few models have been developed
in the field of remanufacturing operations.
Upgrade: According to Parkinson and Thompson (2003),
upgrade refers to a process that gives a product en-
hanced functionality. Naini and Shafiee (2011) proposed
an optimal upgrade strategy and price for the SHP under
warranty using 3 decision variables: past age, upgrade
action and warranty period. A case study is conducted
on electrical drills with real data from a dealer. Shafiee
et al. (2011b) developed a stochastic cost benefit analysis
to optimize the investment made in the upgrade actions for
the SHP with a failure free warranty. The results indicate
that the decision to improve components reliability before
selling is more profitable, than a product sold without
improvement. Khatab et al. (2013) developed a mathe-
matical model to investigate the interactions between the
upgrade level decisions, the optimal maintenance policy
decisions and the total costs incurred during the lifetimes
of these refreshed systems. Lo and Yu (2013) derived a
preventive maintenance model for stochastic degradation
 CONFIDENTIAL. Limited circulation. For review only.
of EOL/EOU components through the minimization of
the acquisition and upgrade costs. Shafiee and Chukova
(2013b) derived a 3D warranty model to find the optimal
upgrade, warranty length and sale price for SHP. Shafiee
et al. (2011c) proposed a stochastic model to improve the
durability and performance of a product by improving the
reliability through upgrade operations.
Refurbishment: Refurbishing is a reprocessing activity
of an old equipment, to enhance it in order to ensure that
its performance is within an acceptable range at minimum
cost (Parkinson and Thompson (2003)). Mont et al. (2006)
introduced a new business model for leasing baby prams
through a reverse logistics system with different levels of
refurbishment and remanufacturing. Kogan (2011) inves-
tigated the interactions between second hand markets for
old phones and the intracompetition within the supply
chain. Liang et al. (2009) developed a model to evaluate
the pricing of returned products used in remanufacturing.
A numerical example on mobile phones is provided.
Reuse: Reuse means continuing to use the abdicated
products rather than destroying or recycling them (Parkin-
son and Thompson (2003)). Reuse is an efficient strategy
to preserve the natural resources (Lo and Yu (2013)).
Jodejko-Pietruczuk and Marcin (2014) developed a model
to estimate cost-effectiveness of components reuse into re-
manufacturing. Okumura et al. (2003) developed a math-
ematical model to find out the maximum number of times
that a system can be reused. Griese et al. (2004) dis-
cussed the obstacles in reuse strategies and provided in-
formation from ecological and environmental perspectives.
Matsumoto et al. (2010) discussed the trade limitations
of reuse services in Japan. A survey indicated that the
quality of EOL products in Japan is good which helps the
second hand markets to grow faster and better both in
quality and performance. Thus, customers prefer to buy
SHP rather than new. carbon emissions and landfill were
reduced because of the reuse.
Recycling: Parkinson and Thompson (2003) define recy-
cling as the process of recovering materials after a product
has been relinquished. Agarwal et al. (2012) introduced
a new approach called consumer incentive method for
recycling purposes which helps the manufacturers to gain
useful accessories from the recycled parts. Dowlatshahi
(2000) developed a strategy on reverse logistics that con-
sists of seven operations including recycling.
Warranty models: The two main problems faced by the
users are uncertainty and durability of SHP (Shafiee and
Chukova (2013a)) due to the lack of past usage and main-
tenance history. In order to reduce the risk and impact
of product malfunctioning, dealers offers generous war-
ranty policies. Shafiee and Chukova (2013a) proposed an
integrated taxonomy for both maintenance and warranty
models. Naini and Shafiee (2011) proposed a joint optimal
price and upgrade level model for a warranted second-hand
product. Aksezer (2011) proposed an extended warranty
policy for the second hand cars. Failure intensities and
characteristics are identified in order to propose a policy
that highlights the trade-offs between the costs and war-
ranty length. Chari et al. (2013) developed a mathematical
model for the optimal one-dimensional unlimited free-
replacement warranty policy with replacements carried out
Preprint submitted to 15th IFAC Symposium on Information Control
Problems in Manufacturing. Received January 5, 2015.
with reconditioned products. Kim et al. (2014) proposed
a periodic inspection and optimal upgrade strategy un-
der non-renewable free replacement warranty with a fixed
length of warranty period for SHP. Saidi-Mehrabad et al.
(2010) proposed an approach for reliability improvement
for the SHP sold under various warranty policies. Chukova
and Shafiee (2013) developed a framework to make man-
agerial decisions for one dimensional warranty of SHP
from dealers perspective. Shafiee et al. (2011a) proposed a
numerical two dimensional repair / replacement warranty
model for the SHP, to estimate the dealers warranty cost
based on past age, usage, service strategy and reliability of
the product. Chattopadhyay and Murthy (2001) developed
three different cost sharing warranty policies. Chattopad-
hyay and Rahman (2008) also developed a taxonomy for
lifetime warranty policies and proposed a one dimensional
free replacement lifetime warranty. Lo et al. (2013) devel-
oped a cost sharing warranty policy including both manu-
facturers and retailers that reduces the manufacturers risk.
Risk and potential hazards: Baker (2006) addresses
the safety issues that arise from the installation of re-
manufactured products in high risk plants. The paper
suggests, auditing all the salvaged equipment after assem-
bling or maintenance operations and to be inspected and
approved by higher agencies such as the OSHA. Boyer
(2006) reviewed various statistics about landfills.
2.2 Classification based on Methodology / Approach
In this section, we will briefly review the papers that
present empirical studies including case studies, field sur-
veys and field experiments. Behdad and Thurston (2011)
conducted a case study on photocopy machines to analyze
the different quality levels of returned products. Li (2013)
conducted a case study at a small appliances manufactur-
ing company in China. Guide Jr et al. (2003) considered a
series of mechanical systems and conducted an experiment
to check the effects of variations in product returns on
remanufacturing cost. Agarwal et al. (2012) conducted
a survey of about 450 people in order to find out the
incentives they received for returning products. Mazhar
et al. (2007) proposed a 2-step analysis to determine
the remaining lifetime of the electric motor in washing
machines. Reyes et al. (1995) conducted a case study on
AC induction motor at Xerox. Propst and Griffin (2000)
developed a model to assess the reliability of oil circuit
breakers in medium voltage switchgears. Naini and Shafiee
(2011) applied their optimal upgrade model on real data
from a second-hand drills dealer. Radhi (2012) developed a
nonlinear programming approach to determine the optimal
minimum quality of re-threaded tires to be used. Weule
and Buchholz (2001) conducted a survey on 120 companies
to derive a multicriteria decision making model to increase
the re-usability of products in assembly systems. Stock and
Mulki (2011) conducted a survey to find out the impor-
tance given to the product returns in reverse supply chain.
Subramanian and Subramanyam (2012) used an online
survey on e-bay to monitor the price differentials between a
remanufactured and an OEM product. The results showed
that customers pay more for the remanufactured products
produced by OEM than the products manufactured by
third party and the price differentials between new and
remanufactured was around 27 per cent. Shrivastava et al.
 CONFIDENTIAL. Limited circulation. For review only.
(2005) proposed a decision making software to assess and
ensure the maximum possible EOL strategy for obsolete
electronic products used in remanufacturing. A case study
is conducted at a recycling facility.
3. CONCLUSIONS
This paper reviewed recent and relevant literature on
quality, reliability, maintenance and warranty problems in
closed-loop supply chains with a focus on the remanufac-
tured or second-hand products. From the classification ta-
ble, it can be noted that there are multiple areas of future
extensions: a) evaluation of remaining useful lifetimes and
degradation levels of returned products and their related
reliability issues, b) degradation tracking & modelling, and
optimal remanufacturing decisions, c) warranty models
from the consumers point of view, d) modelling of dis-
assembly activities, their yield and their impacts on refur-
bishment and upgrade operations, e) burn-in, inspection,
maintenance and safety strategies for SHP, etc.
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 Table 1. Mapping and Classification Table
Quality Reliability Maintenance Remanufacturing models Warranty Risk

Models Models Models General Disassembly Upgrade Refurbish Reuse Recycle Models Models

Case Studies 5, 14, 18, 1, 20, 21, 36, 40 46, 56 5, 39 5, 46, 56 14, 48 31, 56 2, 39, 53 3, 31
31, 56 48

Examples 44, 47, 8, 13, 22, 23, 25, 27, 28, 24, 46 27, 34, 23, 60, 8, 13, 24 8, 10, 11, 12, 41
60, 63 27, 36, 38, 45, 55, 62 39, 45, 63 24, 27, 24, 28, 34,
53, 57 49, 51, 41, 57, 49, 51, 52, 54
53, 54 62

General Discussion 3, 16, 19 1, 21, 61 3 7, 58 7, 46 37, 46 3, 17, 14, 17, 15,19 3, 7, 61

30, 37, 35, 37,
46, 61 46, 61

Literature Review 9 9 9, 50 9 9 9 9 9, 9 9, 50

Surveys 59 1 42, 58 14 42 14, 35 14 59

Taxonomy 42 42, 50 42 42 42 42 42 11, 50

Tracking Technologies, 29 26, 29, 49 29, 43, 61 29, 43 29 29 26, 29, 29, 43 3, 38
Methods 43

Attracting methods, In- 19, 37, 1 45, 55 14, 37 45 32, 37 37 19

centives 44

Computer programs, Al- 25, 43, 62 5, 43 34 43 34

gorithms

Dealers Perspective 33 53 28 39, 51, 12, 28, 33,

53, 54 39, 49, 51,
52, 53, 54

General Perspective 31, 37, 1, 13, 27, 57 25, 27, 45, 17 31, 37, 63 5, 27, 37, 31, 37, 13, 37, 31 10, 11 31, 41
47, 48, 61, 62 45 63 41, 57,
63 63

Manufacturers Perspec- 33 1, 2 34 60 24 2, 8, 33, 34

tive

Fuzzy Logics 43 43 43

Game Theory 19, 33 33 33

Heuristics 18 1 6, 45 45 61

Linear Prog., MILP 40 5

Markov chains, Queueing 60 5 5, 60

MCDM 31, 60 26 61 60 26, 61 31 51 31

Problems in Manufacturing. Received January 5, 2015.

Non-Linear Prog., 16, 18, 60
MINLP 47, 60
CONFIDENTIAL. Limited circulation. For review only.

Preprint submitted to 15th IFAC Symposium on Information Control

Regression Analysis 59 2, 20, 22, 26, 22 23 26 59 59
36, 61

Scenarios, Sensitivity 18, 19, 13, 23, 26, 53 28, 45, 55, 62 5, 34, 39, 60, 63 13, 24, 31 10, 28, 34, 41
Analysis 44, 47, 45, 51 26, 41 39, 51, 53
63

Software & Spreadsheet 56 61 56, 61 31, 56 61 56 39

Applications

Simulation Models 31 22, 23, 38, 57 6, 22 40 5 23 31 31

Stochastic Models 5, 16, 44, 2, 8, 13, 20, 6, 22, 25, 27, 27, 34, 23, 32, 8, 13, 2, 8, 10, 11, 41
47, 63 21, 22, 23, 28, 55 39, 45, 63 24, 31, 12, 24, 28,
24, 27, 38, 49, 51, 41, 62 34, 39, 49 51,
49, 53 54 52, 53, 54