Abstract
PurposeIn the last 20 years, e-waste has become a serious issue resulting from an overwhelming amount of electronics consumption. However, there has been limited research on how to decrease such waste in a structured manner. Toward study was to use a simulation methodology to investigate the dynamics of upfront investment in reliability enhancement promoted by performance-based contracting (PBC), based on the number of spare parts and duration of the contract.Design/methodology/approachThe present research first details the relevant mathematical equations and uses game theory to demonstrate the utility for supplier and buyer relationships. Next, the effects of reliability enhancement, spare partsPBC are analyzed using a BlockSim simulation model.FindingsThe results indicate strong relationships among system design cost, reliability, availability and service cost. The authors found that investment in reliability increases system availability while reducing total service costs. Furthermore, increasing the spare parts inventory was determined to have less influence on the readiness of highly reliable systems. The findings support the notion that PBC reduces e-waste by increasing system availability, incentivizing upfront investment in reliability growth.Research limitations/implicationsRecognition of these findings in the context of buyer–supplier relationships will help managers better understand the value of upfront reliability investment, reducing maintenance, repair and overhaul requirements, avoiding the need to plan for extra spare parts and minimizing volume and the resulting e-waste.Practical implicationsThis study also clarifies the uncertainty associated with upfront investment and provides potential incentives for suppliers.Originality/valueThe main contribution of this study is its use of PBC for e-waste reduction, highlighting the effects of upfront investment in reliability enhancement. The authors applied a game theory model to illustrate the relationship between incentives and upfront investment and demonstrate how increased levels of spare parts can be counterproductive to achieving readiness, reducing inventory and consequent e-waste.
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