Environmental and economic evidence is increasingly supporting the need for better analytical tools for evaluating the recovery of consumer products. In response, we present a novel mathematical model for determining what we call the Optimal Recovery Plan (ORP) for any given product. The ORP is based on an evaluation and optimization of the economics of remanufacturing consumer products versus demanufacturing in the context of Extended Producer Responsibility (EPR) legislation, a driving force behind the adoption remanufacturing initiatives by firms. We provide an illustrative application of the model and then discuss its implications for scholars and practitioners concerned with sustainable business development.

1. PRODUCT RECOVERY DECISIONS
WITHIN THE CONTEXT OF EXTENDED
PRODUCER RESPONSIBILITY
Michael R. Johnson and
Ian P. McCarthy
Beedie School of Business
Simon Fraser University,
Vancouver, Canada
Johnson, M.R., McCarthy, I.P., Product recovery decisions within the context of Extended Producer
Responsibility. J. Eng. Technology Management (2014)

2. PRODUCT REMANUFACTURING
“product remanufacturing is
where a used product is returned
(or collected through take-back
schemes such as leasing or
deposits), followed by a process
of product disassembly, cleaning
and rebuilding the product to
specifications of the original
manufactured product”
(Johnson & McCarthy 2014)

3. PRODUCT DEMANUFACTURING
“demanufacturing attempts to
salvage any remaining economic
value in the EOL product through
disassembly and promotes
material recycling over disposal”
(Johnson & McCarthy 2014)

4. EXTENDED PRODUCER RESPONSIBILITY (EPR)
•
Extends financial responsibility for
managing the product’s end-of-life
back onto the producer of the
product
•
Two Examples:
WEEE Directive
European Union’s Directive on
End of Life Vehicles (ELV)
•
Forces manufacturers to consider:
–
Product design and its
relationship with life-cycle
–
Cost-effective and efficient
management of products at
the end-of-life (EOL)

5. PRODUCT RECOVERY AS A REMANUFACTURINGDEMANUFACTURING CONTINUUM
Source: Johnson & McCarthy (2014)

6. THE GAP OUR MODEL ADDRESSES
• Existing research focuses on
remanufacturing and demanufacturing as
separate and independent processes
• Existing research also overlooks:
• Decision support for OEMs seeking to
evaluate lower level material recycling
activities of demanufacturing versus
the transitional element of whole
product remanufacturing (multiple
product life-cycles)
• The context of EPR on the above issue
and its changing emphasis on “reuse”
over “recycling”

7. OUR INTEGER PROGRAMMING MODEL
• Can be used to evaluate the economics of ‘whole’ product
remanufacturing versus whole product demanufacturing in the
context of EPR
• Reveals remanufacturing profitability and offers a sensitivity
analysis for understanding of the economic drivers of
remanufacturing products.

8. INTEGER PROGRAMMING MODEL
• Remanufacturing Optimization Model - Overview
[CRM i
How to
Rebuild Product?
[CNPi
CAi
100% Remanufacturing of Product
Complete Rebuild of Product
No need for New Components
CDi ]
Variation of New and
Optimal Economic Plan?
Remanufactured Parts
CAi
CDi ] MaxMROi
CLFi
100% Demanufacturing of Product
- recycling, shredding and landfill only
No Rebuild of Product
Build Product from New ComponentsOnly

9. INTEGER PROGRAMMING MODEL
Inputs
Integer
Programming
model
Economic Parameters
Physical Product Parameters
Optimal Remanufacturing Plan (ORP)
•
List of parts and subassemblies that are
economical for remanufacturing
•
List of parts and subassemblies that should
be demanufactured.
•
Optimized decision-making associated
with EPR restrictions – achieving
mandated recovery rates at lowest cost

10. APPLICATION OF THE MODEL
Two telephones::
1. Consumer telephone –Used as a test-bed for developing the model
2. Business telephone – ubiquitous in NA businesses today
Two different model scenarios were investigated
to develop the model:
Model 1: Data collected on the current economic
conditions of remanufacturing the telephone
at the end-of-life. EPR constraints not
imposed.
Model 2: Recovery-Reuse Constraints of WEEE
Directive imposed.

11. MODEL 1 RESULTS – EPR CONSTRAINTS NOT
IMPOSED Material Destinations of Model 1
I. New versus Reuse
Total Mass of New Parts
Total Mass of REMAN and Reused Parts
Total Mass
II. Material Destinations
Mass Remanufactured and Reused (Kg)
Mass Recycled (Kg)
Mass Landfilled (Kg)
Total Mass
Mass (Kg)
1.69
0.30
1.99
Mass (Kg)
0.30
0.15
1.54
1.99
% of Total Mass
84.92%
15.08%
100.00%
% of Total Mass
15.08%
7.54%
77.39%
100.00%
Economic Output of Model 1
Economic Totals
Total Rebuild Cost
Total Cost of New Parts (sum of CNP)
Total Remanufacturing Costs (sum of CRM)
Total Demanufacturing Costs (Landfill and Recycling)
Total Demanufacturing Revenue (Reuse and Recycling)
Total Disassembly & Assembly Costs (sum of CA and CD)
-$
-$
-$
-$
$
-$
Amount
7.48
5.40
1.63
0.17
0.12
0.40

12. MODEL 1 – SENSITIVITY ANALYSIS
+4
00
%
+8
00
%
+1
00
%
+2
00
%
+5
0%
+2
5%
0%
-2
5%
-5
0%
-1
00
%
#1
)
(n
ot
e
Total Rebuild Cost of Telephone
% Change of Each Economic Varaible
$-$2.00
-$4.00
-$6.00
-$8.00
-$10.00
CD and CA
-$12.00
CRM
-$14.00
CNP
-$16.00
CLF
The Total Rebuilt Cost (and total % of the Rebuilt Product) is most sensitive to
cost of new parts and remanufacturing costs.

13. MODEL 2 RESULTS – EPR CONSTRAINTS IMPOSED
Material Destinations of Model 2
I. New versus Reuse
Total Mass of New Parts
Total Mass of REMAN and Reused Parts
Total Mass
II. Material Destinations
Mass Remanufactured and Reused (Kg)
Mass Recycled (Kg)
Mass Landfilled (Kg)
Total Mass
Mass (Kg)
0.2
1.79
1.99
Mass (Kg)
1.79
0.15
0.05
1.99
% of Total Mass
10.05%
89.95%
100.00%
% of Total Mass
89.95%
7.54%
2.51%
100.00%
Economic Output of Model 2
Economic Totals
Total Rebuild Cost
Total Cost of New Parts (sum of CNP)
Total Remanufacturing Costs (sum of CRM)
Total Demanufacturing Costs (Landfill and Recycling)
Total Demanufacturing Revenue (Reuse and Recycling)
Total Disassembly & Assembly Costs (sum of CA and CD)
Amount
-$9.41
-$1.04
-$6.19
-$0.002
$0.12
-$2.29

14. DISCUSSION
• Existing research focuses on “why” firms
should undertake product recovery.
• Our study examines “how” individual
products can be evaluated to maximize
economically the substitution effects of
remanufacturing versus demanufacturing.
• We show that whole product
remanufacturing can be economically
justified over demanufacturing for certain
products within an EPR environment.
• The sensitivity analysis demonstrates that
lower labour costs of developing nations
favor product remanufacturing over
demanufacturing (recycling) activities.