Reliability-informed end-of-use decision making for product sustainability using two-stage stochastic optimization

Abstract

The concept of circular economy has been diffused in recent decades to promote economic growth that does not add to the burden on natural resource extraction. Re-X options (e.g., reuse, repair, refurbish, remanufacture, recycle) have been gradually adopted in the product development process and optimized to reduce or eliminate waste and pollution. Although manufacturing incorporating Re-X options can be more environmentally friendly, it involves more sources of uncertainty than traditional manufacturing since the end-of-use products can be collected from multiple origins with various quantities and qualities, and the market demand for both new and remanufactured products cannot be forecasted perfectly. Thus, there is a need to optimize the Re-X policy to alleviate the negative impacts of the higher uncertainty. One option is using the reliability information of new products to estimate the end-of-use conditions and applying multi-stage stochastic optimization to capture multiple demand scenarios. This paper develops a two-stage stochastic optimization model to optimize the quality thresholds for reuse, recycling, and remanufacturing options. Our objective is to minimize the total cost, energy consumption, and environmental impact of producing and providing warranty service for a product family. The model employs reliability information of product components to estimate the warranty service cost and the end-of-use conditions of the returned resources. A case study on a general product family is implemented to illustrate the efficacy of the optimization model. Results show that the two-stage optimization can achieve cost and environmental impact reduction for a hybrid manufacturing and remanufacturing process.