Impact of uncertainties on recovery behavior in a remanufacturing environment

Abstract

PurposeRemanufacturing of used products is an emerging business area, which is attractive from both an economic and an environmental point of view. Aims to investigate to what extent profit orientation in product recovery management will stimulate an environmentally conscious behavior in the sense that it promotes high recovery levels. This study also seeks to focus on a product recovery system where, in the context of extended product responsibility, a manufacturer of original products is also engaged in remanufacturing used products taken back from its customers.Design/methodology/approachFor this type of a closed‐loop supply chain the optimal recovery and production policy is evaluated. By a numerical analysis, it is shown how cost‐efficient decision making affects the product recovery behavior. In a sensitivity analysis it is evaluated how various problem determinants influence the preference for product recovery. Specifically, the impact of different sources of uncertainty is investigated.FindingsTaking advantage of the respective insights, it is discussed which measures can be taken to harmonize economical and environmental‐driven behavior in product recovery management. It is shown that uncertainty in returns and demands can be a considerable obstacle to follow a consequently environmental‐benign recovery strategy within a reverse logistics system.Research limitations/implicationsThe analysis in this paper is restricted to stationary demand and return patterns. In a non‐stationary situation the impact of uncertainties could be even stronger, since excessive returns might happen more often.Originality/valueFocuses on important issues in product recovery management.