Remanufacturing

Remanufacturing is a form of recycling where used durable goods are refurbished to a condition comparable to new products. With reduced energy and resource consumption, remanufactured goods are produced at a fraction of the original cost and with lower emissions of pollution. This paper presents a theoretical model of remanufacturing where a duopoly of original manufacturers produce a component of a final good. The component needing to be replaced creates an aftermarket. An environmental regulation assessing a minimum level of remanufacturability is also introduced. The main results indicate that a social planner could use collusion of the firms on the level of remanufacturability as a substitute for environmental regulation. However, if an environmental regulation is to be implemented, collusion should be repressed since competition supports the public intervention better. One of the results also coincides with the Porter Hypothesis.remanufacturing, competition, environmental regulation, Porter Hypothesis

Remanufacturing

This paper presents a theoretical model of remanufacturing where a duopoly of original manufacturers produces a component of a final good. The specific component that needs to be replaced during the lifetime of the final good creates a secondary market where independent remanufacturers enter the competition. An environmental regulation imposing a minimum level of remanufacturability is also introduced. The main results establish that, while collusion of the firms on the level of remanufacturability increases both profit and consumer surplus, a social planner could use collusion as a substitute for an environmental regulation. However, if an environmental regulation is to be implemented, collusion should be repressed since competition supports the public intervention better. Under certain circumstances, the environmental regulation can increase both profit and consumer surplus. Part of this result supports the Porter Hypothesis, which stipulates that industries respecting environmental regulations can see their profits increase.Remanufacturing, competition, environmental regulation, Porter hypothesis.

Remanufacturing

This paper presents a theoretical model of remanufacturing where a duopoly of original manufacturers produces a component of a final good. The specific component that needs to be replaced during the lifetime of the final good creates a secondary market where independent remanufacturers enter the competition. An environmental regulation imposing a minimum level of remanufacturability is also introduced. The main results establish that, while collusion of the firms on the level of remanufacturability increases both profit and consumer surplus, a social planner could use collusion as a substitute for an environmental regulation. However, if an environmental regulation is to be implemented, collusion should be repressed since competition supports the public intervention better. Under certain circumstances, the environmental regulation can increase both profit and consumer surplus. Part of this result supports the Porter Hypothesis, which stipulates that industries respecting environmental regulations can see their profits increase.remanufacturing ; competition ; environmental regulation ; porter hypothesis

Three essays on product design: incorporating capacity, remanufacturing, and environmental friendliness

A product line design problem studies the optimal product line and corresponding quality and price for each product. This problem is critical for the success of businesses in both manufacturing and service sectors, and has been an important research focus for decades in both areas of marketing and operations management. To contribute in this line of discussion, this dissertation comprises of three essays in which we investigate how product line design problem interacts with such operations issues as capacity, remanufacturing, and reverse logistics, and examine how the results of these interactions affect the environment. Throughout this dissertation, we focus on the design of product quality, a single dimensional vertical differentiation which represents all more-is-better attributes of a product. In the first essay, we investigate how “back-end" capacity constraint interacts with “front-end" pricing decisions. Specifically, we assume capacity is consumed in both fixed (depends on the length of a product line) and variable (depends on product quality) ways. A product design model for segmented market is used to derive and analyze the optimal product line strategy. We find that lower capacity introduces operations cannibalization which reduces the length of the optimal product line. We also show that if longer product line consumes more fixed capacity (e.g., for changeover or setup), then the resulting economy of scale could make offering a standard product optimal, which completely contradicts the classic product line design results. In the second essay, we study remanufacturing and its environmental con sequences within the context of product design. In particular, production costs and consumer valuations are considered as functions of quality and are differentiated based on whether the product is non-remanufacturable, remanufacturable, or remanufactured. Given this, the firm maximizes its profit by determining whether or not to remanufacture and, if so, how much to remanufacture. Correspondingly, we examine the environmental consequences of these optimal remanufacturing decisions using a quality-dependent measure which focuses on resource extraction and waste disposal. We show that true “green" consumers should not only value remanufacturable products but also value remanufactured products. We also find that consumers' higher willingness-to-pay and the firm's low production cost can potentially lead to worse environmental consequences in addition to higher profit. In the final essay, we extend the model in the second essay by incorporating an exogenous collection rate and by considering social and environmental welfare in the decision making process. Examining the collection rate, we confirm that an increase in the collection rate generally benefits both the firm and the environment. We also find that there exists a threshold of collection rate above which collecting more units yields no effect on either profitability or environmental friendliness. Examining social and environmental welfare, we find that considering environmental welfare benefits the environment due to both lower quality and a smaller sales volume. In contrast, considering consumer welfare hurts the environment due to a much larger sales volume. This once again underscores that it is consumption that hurts the environment

Upgradable system opportunities in order to rationalize materials

Part of: Seliger, Günther (Ed.): Innovative solutions : proceedings / 11th Global Conference on Sustainable Manufacturing, Berlin, Germany, 23rd - 25th September, 2013. - Berlin: Universitätsverlag der TU Berlin, 2013. - ISBN 978-3-7983-2609-5 (online). - http://nbn-resolving.de/urn:nbn:de:kobv:83-opus4-40276. - pp. 96–101.Design of more sustainable products is a fundamental priority in our society. New opportunities for facilitating the dissemination of the remanufacturing approach or the Product-Service Systems, or for increasing the lifetime of product (three ways for rationalizing of materials) are proposed by the integration of upgrades, functional enrichments brought to the product. This paper aims to show the need of product upgradability through a concrete study focused on four hypotheses: • H1- Upgradability concept requires a potential of disposed devices which still works. • H2- Upgradability concept requires a need for adaptability of product towards user needs. • H3- Upgradability concept requires a need for adaptability of product versus the competition. • H4- Upgradability concept is consistent with an accumulation of problems. The first results show the necessity to consider a new sort of "evolutionary" products for sustainability: Innovations with multiples upgrade cycles

Distribution Channel Choice and Divisional Conflict in Remanufacturing Operations

We consider a firm consisting of two divisions, one responsible for designing and manufacturing new products and the other responsible for remanufacturing operations. The firm will sell these new and remanufactured products either directly to the consumer (direct selling) or through an independent retailer (indirect selling). Our study demonstrates that a firm’s organizational structure can affect its marketing decisions. Specifically, a decentralized firm with separate manufacturing and remanufacturing divisions can benefit from indirect selling with higher firm profit, supply chain profit, and total consumer demand than direct selling. Moreover, this structure also induces a remanufacturable product design. In contrast, a centralized firm in which the manufacturing and remanufacturing divisions are consolidated is intuitively better off by choosing direct selling than indirect selling. Furthermore, we show that, surprisingly, when the focal firm sells through an independent retailer, a decentralized internal structure can result in higher supply chain profit than a centralized internal structure. We further investigate the case of dual dedicated channels and conclude that, while direct selling of remanufactured products and indirect selling of new products can better induce a remanufacturable product design and higher supply chain profit, it is not in the best interest of the firm in terms of total sales and firm profit

The boomerang returns? Accounting for the impact of uncertainties on the dynamics of remanufacturing systems

Recent years have witnessed companies abandon traditional open-loop supply chain structures in favour of closed-loop variants, in a bid to mitigate environmental impacts and exploit economic opportunities. Central to the closed-loop paradigm is remanufacturing: the restoration of used products to useful life. While this operational model has huge potential to extend product life-cycles, the collection and recovery processes diminish the effectiveness of existing control mechanisms for open-loop systems. We systematically review the literature in the field of closed-loop supply chain dynamics, which explores the time-varying interactions of material and information flows in the different elements of remanufacturing supply chains. We supplement this with further reviews of what we call the three ‘pillars’ of such systems, i.e. forecasting, collection, and inventory and production control. This provides us with an interdisciplinary lens to investigate how a ‘boomerang’ effect (i.e. sale, consumption, and return processes) impacts on the behaviour of the closed-loop system and to understand how it can be controlled. To facilitate this, we contrast closed-loop supply chain dynamics research to the well-developed research in each pillar; explore how different disciplines have accommodated the supply, process, demand, and control uncertainties; and provide insights for future research on the dynamics of remanufacturing systems

Three essays on product design for the environment

Design is a powerful instrument by which the world is forged to satisfy the needs of mankind. As the awareness and pursuit of sustainability increases, we have seen the transition from “design for needs” to “design for environment”. Design for the Environment (DfE) requires manufacturers to focus on conserving and reusing resources, minimizing waste, and reducing hazard during a design process. DfE includes, but not limited to Design for Recovery and Benign by Design. Manufacturers are facing the challenge and opportunity of incorporating DfE into their businesses. Eco-conscious product design is critical for the success of businesses, and, therefore, has been an important research focus. This dissertation presents a design approach to help manufacturers maximize profits through optimal eco-conscious product design, and to seek insights for policy makers and managers into inducing product design for the environment. The focus of this dissertation is the interaction between product design for the environment with market segmentation, inter-divisional coordination, and regulatory policies. This dissertation presents two studies on Design for Recovery. The first study analyzes the effects of remanufacturable product design on market segmentation and trade-in prices. By identifying the system and market parameters under which it is optimal for a manufacturer to design a remanufacturable product, the study demonstrates that entering a remanufactured-goods market in and of itself does not necessarily translate into environmental friendliness. In addition, this study develops and compares several measures of environmental efficiency, and concludes that emissions per revenue can serve as the best proxy for emissions as a metric for measuring overall environmental stewardship. The second study investigates the impact of decentralization of manufacturing and remanufacturing operations within a firm on product design, pricing, and profitability, and seeks inter-divisional incentive mechanism to achieve firm-wide coordination. This study shows that decentralization and divisional conflict not only result in lower firm profit and product sales, but also create a hurdle for remanufacturable product design. Thus, an inter-divisional incentive mechanism is suggested to facilitate coordination between two profit-maximizing divisions. The study signifies a two-part coordination scheme (a transfer price and a fixed lump sum), through which a decentralized firm can achieve first-best total profit and production quantity; in addition, the manufacturing division is incentivized to design new products to be remanufacturable. The last study focuses on Benign by Design. In this essay, an innovative pharmaceutical company decides whether to adopt green pharmacy in response to the regulatory policy of the pharmaceutical stewardship and/or patent term extension, as well as the competition from a generic company. One the one hand, the patent term extension can encourage the innovative company to invest in green pharmacy, and the regulator can induce green pharmacy with short extended term when market competition is intensive. On the other hand, a pharmaceutical company will neither go green nor bear all the compliance cost in the presence of the take-back regulation because the compliance cost is traditionally independent of the choice of green pharmacy. Results show that although adding the take-back regulation on top of the patent term extension generally reduces firm profit and requires a longer term extension, such combined policy can excel the single policy of patent term extension under certain circumstances. In addition, a modified take-back policy that associates compliance cost with the firm's choice of green pharmacy is better than the patent term extension when the competition intensity is relatively high