Digital Model for better policy making: simulation optimization approach to maximize profitability in Circular Manufacturing

Abstract

Business decisions on circular manufacturing context is challenging and complex. Industry 4.0 technologies have been changing the manufacturing world, but finding sustainable solution using these technologies demands more attention. This study investigates simulation-optimization techniques of a Digital model in remanufacturing, highlighting insights on inventory management, demand fulfilment, profitability, and recirculation strategy dynamics. It suggests that maximizing demand fulfilment doesn’t always highest profitability due to cost variations. Moreover, it stresses the importance of identifying profitable recirculation options and optimizing product quality. It also helps in better inventory management policy, finding more fitting product return distribution of discarded product and setting an optimum lead time for inventory management. A mathematical model and an optimization algorithm are developed which is connected for a discrete event simulation. The result highlights the underlying complexity of the scenario and generate valuable insights.