The value of radio frequency identification technology for managing pools of returnable transport items

Thesis Type: Postgraduate

Institution Of The Thesis: Middle East Technical University, Turkey

Approval Date: 2010

Thesis Language: English

Student: Ayşegül Demir

Co-Supervisor: FATMA SEDEF MERAL, Fatma Meral


Limited asset visibility is a key problem in the management of returnable transport items (RTIs) like reusable containers, pallets and kegs. One tool to increase asset visibility is radio frequency identification (RFID) technology. However, RFID requires high investment cost and intensive efforts for implementation. In this study, we investigate the added value of using RFID technology for the management of the RTI pool in a closed-loop supply chain setting considering both costs and benefits. We have conducted a case study in a company which has recently started an RFID application in its closed-loop supply chain of RTIs. The aim of this case study is to identify and understand how an existing RTI pool is managed and the impact of using RFID technology on the management of such an RTI pool. In order to quantify the added value of RFID technology in RTI pool management, we search for the minimum cost solutions both without and with the use of RFID technology in a problem environment similar to that of our case study using the simulation optimization method. We also analyze the impact of using RFID technology on RTI pool management in terms of several performance measures, including RTI pool size, RTI lifetime, RTI trippage and the cycle time for RTIs to complete one trip in the closed-loop supply chain. In our study, we develop a number of discrete event simulation models of the identified closed-loop supply chain of RTIs operating with our predetermined decision rules for the RTI pool management using the simulation software Arena. We then develop our simulation optimization model in OptQuest for Arena in which the discrete event simulation models are embedded. The results from the simulation optimization method show that the added value of using RFID technology is mostly positive and it depends on the severity of the problematic issues in the closed-loop supply chain, as well as on the extent of improvements that RFID brings about.