Value of RFID in remanufacturing

Abstract

Remanufacturing is characterised by a high level of uncertainty in terms of the quality of returned products. One of the possible benefits of RFID-derived product information is in alleviating the quality uncertainty associated with the remanufacturing process. Our study assesses the potential benefits of RFID-derived product information in real remanufacturing process and compares it to a manual inspection regime using an analytical model. Intuitively, the higher the level of uncertainties in remanufacturing, the higher will be the Value of Information (VOI). To test this, we were required to model the relationship between costs and uncertainties. We also obtained some non-obvious results. For example, we find that manually obtained information can also be valuable when the uncertainties in remanufacturing occur primarily due to missing components in returned products. Moreover, our study demonstrates that information is valuable when (1) amount of error in decisions due to the uncertainties is high and (2) the error is costly.