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Recycling procurement strategies with variable yield suppliers

Author

Listed:
  • Paul Rowe

    (University of North Carolina at Chapel Hill)

  • Burak Eksioglu

    (Clemson University)

  • Sandra Eksioglu

    (Clemson University)

Abstract

This paper addresses a procurement issue facing a polystyrene packaging manufacturer considering its optimal purchasing strategies between two suppliers—one providing virgin material, the other offering recycled material. We model a single-period scenario where each supplier sells product with a known yield distribution at market pricing. The manufacturer must choose whether to sole-source or dual-source, as well as determine how much material to purchase from each supplier to meet deterministic demand. Our results indicate that there is a range of prices from the recycled material supplier where dual-sourcing will lead to higher manufacturer profits compared to sole-sourcing. We show, based on the procurement strategy, the optimal quantities to purchase to maximize manufacturer’s expected profit.

Suggested Citation

  • Paul Rowe & Burak Eksioglu & Sandra Eksioglu, 2017. "Recycling procurement strategies with variable yield suppliers," Annals of Operations Research, Springer, vol. 249(1), pages 215-234, February.
    • Handle: RePEc:spr:annopr:v:249:y:2017:i:1:d:10.1007_s10479-015-1872-y
    DOI: 10.1007/s10479-015-1872-y
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    References listed on IDEAS

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    Cited by:

    1. Rogetzer, Patricia & Silbermayr, Lena & Jammernegg, Werner, 2019. "Sustainable sourcing including capacity reservation for recycled materials: A newsvendor framework with price and demand correlations," International Journal of Production Economics, Elsevier, vol. 214(C), pages 206-219.
    2. Patricia Rogetzer & Lena Silbermayr & Werner Jammernegg, 2018. "Sustainable sourcing of strategic raw materials by integrating recycled materials," Flexible Services and Manufacturing Journal, Springer, vol. 30(3), pages 421-451, September.
    3. Claudia Schilkowski & Manish Shukla & Sonal Choudhary, 2020. "Quantifying the circularity of regional industrial waste across multi-channel enterprises," Annals of Operations Research, Springer, vol. 290(1), pages 385-408, July.
    4. Iyer, Ananth V. & Vedantam, Aditya & Lacourbe, Paul, 2023. "Recycled content claims under demand benefit and supply uncertainty: Multi-period model and application to glasswool insulation," European Journal of Operational Research, Elsevier, vol. 309(2), pages 745-761.
    5. Qingguo Bai & Jianteng Xu & Yuzhong Zhang, 2022. "The distributionally robust optimization model for a remanufacturing system under cap-and-trade policy: a newsvendor approach," Annals of Operations Research, Springer, vol. 309(2), pages 731-760, February.

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