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The Simulation Model

What should you do?

In this simulation you should take the role of a manager in a manufacturing company. The company produces and sells new products, and has the possibility to collect used products for recycling or remanufacturing.

To keep the model simple, assume that you have to plan for two periods corresponding to two generations of the product. Specifically, you have to take the following decisions:

Which scenarios can you choose from?

Based on the general problem description above, you can select one of the following three possible market scenarios:

Scenario 1: Business Copiers

Used business copiers and toners are collected and remanufactured. After this renewing process, the copiers and the toners can be sold as new. Therefore, new second generation products and remanufactured first generation printers are perfect substitutes and supplement each other in satisfying the second period demand (Krikke et al. (1999)).

General economic data:

Scenario 2: Mobile Phones

Mobile phones can be remanufactured after their "first life", and sold again in emerging markets. This model represents a case where new and remanufactured products are sold in two completely separated markets, without any overlap in demand (Geyer and Blass (2010)).

General economic data:

Scenario 3: New and Used Cars

Customers will only buy either a new car or a second-hand car, but not both. Thus, there is the potential for 'cannibalization' of new product sales, through offering remanufactured products (Atasu et al. (2010)). In this scenario of our model, the demand for new and remanufactured products is coupled by downward substitution. Customers will always prefer the cheaper, remanufactured product when it is available, but will buy new products otherwise.

General economic data:

How is your performance measured?

There are five key figures which measure your company's success:

The overall profit is simply the total income from sales revenues plus the resource value reclaimed through recycling, minus the total cost associated with new production in both periods and collection and remanufacturing of used products in the second period.

The total input of virgin raw materials focuses on the consumption of (scarce) virgin raw materials in the production process, which can be reduced by using recycled raw materials.

The total ressource consumption is measured in Euros and focuses on the all the inputs needed by the manufacturer to operate its processes. This includes the value of the raw materials, the production cost but also the cost paid for acquiring used products for remanufacturing or recycling.

Literature

Atasu, A., Guide Jr., V. D. R., Van Wassenhove, L. N. So what if remanufacturing cannibalizes my new product sales?, California Management Review 52, 56—76 (2010)
Geyer, R., Blass, V. D. The economics of cell phone reuse and recycling, International Journal of Advanced Manufacturing Technology 47, 515—525 (2010)
Krikke, H. R., van Harten, A., Schuur, P. C. Business case Océ: Reverse logistic network re-design for copiers, OR Spectrum 21, 381—409 (1999)
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