The effect of environmental parameters on product recovery

Economical and environmental issues are the main driving forces for the development of closed-loop supply chains. This paper examines the impact of environmental issues on long-term behaviour of a single product supply chain with product recovery. The environmental issues examined are the firm's `green image' effect on customer demand, the take back obligation imposed by legislation, and the state campaigns for proper disposal of used products. The behaviour of the system is analyzed through a dynamic simulation model based on the principles of the system dynamics (SD) methodology. This model includes all major inventories of new, used and recovered products and the flows among them. Inventory levels and flow rates are linked through differential equations. The dynamic model provides an experimental simulation tool, which can be used to evaluate the effect of environmental issues on long-term decision making in collection and remanufacturing activities and on product demand. Numerical analysis illustrates the potential uses of the methodology.