Impact of carbon emission policies on manufacturing, remanufacturing and collection of used item decisions with price dependent return rate

TLDR: In this paper, the authors presented a production, remanufacture and waste disposal EPQ model under different carbon regulatory mechanisms of a firm that sells new and repaired versions of its product at two different markets and it is assumed that remanufactured items are of poorer quality; i.e., not "as-good-as new".

Abstract: Industries across the world today are looking for cost effective solutions to reduce waste and curb the carbon emission, due to heightened awareness about ecological responsibility coupled with stringent government regulation and legislations, through operational adjustments in manufacturing/remanufacturing and collection (used products) policy. This paper presents a production, remanufacture and waste disposal EPQ model under different carbon regulatory mechanisms of a firm that sells new and repaired versions of its product at two different markets and it is assumed that remanufactured items are of poorer quality; i.e., not ’as-good-as new’. In reality, the return rates of used product from the end customers of both markets are influenced by the purchasing price, and therefore this study suggests that the return flow of used product as an increasing function of purchasing price. We studied the optimization model under two scenarios: (i) no carbon emission policy (ii) carbon emission norms (a. carbon tax; b. strict carbon cap; c. carbon cap and trade). Mathematical modeling followed by numerical analysis is carried out to examine the impact of regulatory policies on optimal decisions and overall emissions. The results indicate that remanufacturing is an effective strategy to decrease carbon emission compared to manufacturing process.