Abstract
Facing a growing amount of waste electrical and electronic equipment (WEEE), a recent recast of the WEEE directive has put a specific reuse target for manufacturers, aiming to reduce environmental pollution and incentivize a green product design. In this paper, in order to examine whether the above two goals can be achieved by setting a specific reuse target, we have modelled a closed-loop supply chain consisting of a supplier (the leader) and a manufacturer (the follower) with the constraint of a mandated remanufacturing target. In this model, the supplier determines the level of interchangeability in product design and the wholesale price of the key component. The manufacturer buys the key components from the supplier and makes production and remanufacturing decisions under the requirement of a mandated remanufacturing target. We have investigated the supply chain’s members’ optimal decisions and analyzed the impact of the mandated remanufacturing target on the optimal profits of the supply chain’s members and consumer surplus, and finally, we have explored the environmental implications of the mandated remanufacturing target. We found that the supply chain’s members’ optimal decisions are affected by the mandated remanufacturing target and the cost of the new component. In terms of the economic implications of the mandated remanufacturing target, we have demonstrated that the increase in the mandated remanufacturing target has negative effects on the profits of the supply chain’s members and consumer surplus. Regarding the goal of incentivizing green product design, we found that the mandated remanufacturing target cannot always incentivize the supplier to implement product design that is beneficial to remanufacturing. From the perspective of the environment, we further indicate that more stringent mandated remanufacturing targets may bring an undesirable environmental outcome.
Highlights
In recent years, the rapid progress in technology brings a higher replacement frequency for electrical and electronic equipment (EEE), resulting in faster growth in the amount of waste electrical and electronic equipment (WEEE) each year
We seek to provide a better understanding on the following research questions: (1) In the context of product design and take-back legislation, what are the optimal decisions for the supplier and the manufacturer? (2) How do cost parameters affect the supplier’s and the manufacturer’s optimal decisions? (3) What are the impacts of the mandated remanufacturing target on the optimal decisions of supply chain partners and the consumer surplus? (4) What are the environmental implications and product design incentives for the mandated remanufacturing target?
In order to properly deal with the WEEE, many countries in the world have implemented various forms of take back legislation, which aims to reduce pollution to the environment, waste of resource and incentivize product design
Summary
The rapid progress in technology brings a higher replacement frequency for electrical and electronic equipment (EEE), resulting in faster growth in the amount of waste electrical and electronic equipment (WEEE) each year. The second research objective of this paper is to investigate the impact of an increased mandated remanufacturing target on the strategy of the supplier’s product design. The third objective of this paper is to examine the impact of the interaction between the supplier and manufacturer in the context of take-back legislation In such a context, we seek to provide a better understanding on the following research questions: (1) In the context of product design and take-back legislation, what are the optimal decisions for the supplier and the manufacturer? The decision sequence between the manufacturer and the supplier is as follows: First, the supplier determines what kinds of product design of key components to implement and sets the optimal level of interchangeability and the wholesale price of the key components.
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More From: International Journal of Environmental Research and Public Health
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