Strategic management of product recovery and its environmental impact

Abstract

ABSTRACT Facing a huge number and variety of discarded products, how to conduct strategic management of product recovery and gain better economic and environmental performances are people's concerns. In this paper, a stylised model of a monopoly manufacturer who implements product recovery management under the voluntary mechanism is considered. The manufacturer can recycle, remanufacture and properly dispose of used cores after collecting. The condition under which the manufacturer gives up product recovery management is discussed and four different product recovery strategies portfolios are characterised according to profitable trade-offs between available product recovery options. Under each product recovery strategies portfolio, the product recovery strategies are determined corresponding to different cost intervals of new product and optimal solutions under per product recovery strategy are displayed. Then, how different revenue and cost parameters influence the optimal production and recovery decisions and economic profits is analysed. To evaluate the environmental impact of per product recovery strategies portfolio, product life-cycle assessment approach is adopted to analyse changes in environmental impacts after incorporating product recovery management. Implementing product recovery management does not always make the environment better and the condition under which implementing product recovery management brings a better environmental impact is determined.