The Impacts of Product Life and Recyclability on Landfill Disposal in Closed Loop Supply Chains

Abstract

For a single type of product, the authors formulate a series of closed loop supply chain models of a manufacturer, a service provider, and a customer. The manufacturer takes back a leased product after it provides a certain number of services and recycles a fraction of materials from the used product. They investigate how the manufacturer's decision on product life and recyclability are influenced by external conditions like landfill disposal costs and recycling subsidies (on materials and facilities). Through analytical and numerical studies, managerial insights and policy implications are derived. For practitioners, (1) a landfill disposal cost threshold exists above which it is economically viable to recycle the used products; (2) as the landfill disposal cost increases, they will increase the product life and decrease the recyclability; (3) as the recycling subsidy increases, they will decrease the product life and increase the recyclability. For a policy maker, how to subsidize the recycler based on the recycled materials amount or on the recycling facility cost is also investigated.