Effective medical surplus recovery

We analyze not-for-profit Medical Surplus Recovery Organizations (MSROs) that manage the recovery of surplus (unused or donated) medical products to fulfill the needs of underserved healthcare facilities in the developing world. Our work is inspired by an award-winning North American non-governmental organization (NGO) that matches the uncertain supply of medical surplus with the receiving parties’ needs. In particular, this NGO adopts a recipient-driven resource allocation model, which grants recipients access to an inventory database, and each recipient selects products of limited availability to fill a container based on its preferences. We first develop a game theoretic model to investigate the effectiveness of this approach. This analysis suggests that the recipient-driven model may induce competition among recipients and lead to a loss in value provision through premature orders. Further, contrary to the common wisdom from traditional supply chains, full inventory visibility in our setting may accelerate premature orders and lead to loss of effectiveness. Accordingly, we identify operational mechanisms to help MSROs deal with this problem. These are: (i) appropriately selecting container capacities while limiting the inventory availability visible to recipients and increasing the acquisition volumes of supplies, (ii) eliminating recipient competition through exclusive single-recipient access to MSRO inventory, and (iii) focusing on learning recipient needs as opposed to providing them with supply information, and switching to a provider-driven resource allocation model. We use real data from the NGO by which the study was inspired and show that the proposed improvements can substantially increase the value provided to recipients

Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products

In this paper, we investigate whether and how the presence of remanufactured products and the identity of the remanufacturer influence the perceived value of new products through a series of behavioral experiments. Our results demonstrate that the presence of products remanufactured and sold by the original equipment manufacturer (OEM) can reduce the perceived value of new products by up to 8%. However, the presence of thirdparty-remanufactured products can increase the perceived value of new products by up to 7%. These results suggest that deterring third-party competition via preemptive remanufacturing may reduce profits, whereas the presence of third-party competition may actually be beneficial for an OEM

Efficient Implementation of Collective Extended Producer Responsibility Legislation

Extended producer responsibility (EPR) is a policy tool that holds producers financially responsible for the post-use collection, recycling, and disposal of their products. Many EPR implementations are collective—a large collection and recycling network (CRN) handles multiple producers’ products in order to benefit from scale and scope economies. The total cost is then allocated to producers based on metrics such as their return shares by weight. Such weight-based proportional allocation mechanisms are criticized in practice for not taking into account the heterogeneity in the costs imposed by different producers’ products. The consequence is cost allocations that impose higher costs on certain producer groups than they can achieve independently. This may lead some producers to break away from collective systems, resulting in fragmented systems with higher total cost. Yet cost efficiency is a key legislative and producer concern. To address this concern, this paper develops cost allocation mechanisms that induce participation in collective systems and maximize cost efficiency. The cost allocation mechanisms we propose consist of adjustments to the widely used return share method and include the weighing of return shares based on processing costs and the rewarding of capacity contributions to collective systems. We validate our theoretical results using Washington state EPR implementation data and provide insights into how these mechanisms can be implemented in practice. This paper was accepted by Serguei Netessine, operations management