In this paper we consider production planning of remanufactured products when inputs have different and uncertain quality levels, and there are capacity constraints. This situation is typical of most remanufacturing environments, where inputs are product returns (also called cores). Production (remanufacturing) cost increases as the quality level decreases, and any unused cores may be salvaged at a value that increases with their quality level. Decision variables include, for each period and under a certain probabilistic scenario, the amount of cores to grade, the amount to remanufacture for each quality level and the amount of inventory to carry over for future periods for un-graded cores, graded cores, and finished remanufactured products. Our model is grounded with data collected at a major OEM that also remanufactures. We formulate the problem as a stochastic program, and illustrate how the deterministic version of the problem yields solutions that cannot be implemented in practice. The stochastic program, although a large linear program, can be solved easily using Cplex. We provide a numeric study to generate insights into the nature of the solution.
The empirical literature considers firm specific aspects affecting corporate sustainability decisions but generally omits the influence of the competition. We advocate that sustainability actions of a company impact its marketplace and vice versa. Therefore, the sustainability return of the single firm is a function of the other firms' sustainability decisions. We approach sustainability decisions as strategic decisions and evaluate the effect of competition and spillovers in a static market entry game. We estimate the parameters of the discrete choice model using the social performance ratings from MSCI KLD 400 Social Index as proxy for sustainability decisions and financial information from Wharton Research Data Services' COMPUSTAT dataset. When strategic interaction is not accounted for, we find that the increasing number of competitors increases the likelihood of sustainability investments, seemingly shows the spillover effect dominates the competition. When we apply the multistage approach, which incorporates competitive interaction, we provide empirical evidence that the effect of competition on the likelihood of entry into the sustainability market dominates the effect of spillover. We find that strategic motives, typically ignored in the empirical literature, appear to be an important factor in understanding sustainability related decisions.
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