Diffusion control of successive product generations with recycling potential
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In this thesis, we study the sales planning problem of a producer who sells two successive generations of a durable good with recycling potential. Certain ex-pensive materials can be recovered from consumer returns of the early-generation product and can be used in manufacturing of the new-generation product. De-mands for the successive product generations arrive as a generalized Norton-Bass diﬀusion process and the recycling operations for the new-generation product are constrained by the early-generation product returns. In this setting, we inves-tigate whether slowing down the new-generation product diﬀusion by partially satisfying its demand might be proﬁtable for the producer who aims to maximize its total proﬁt from the entire product line. Such manipulation of the diﬀusion process may improve the use of recycled content in production as well as the cross-generation repeat purchases over a suﬃciently long selling horizon. The optimal sales plan involves partial demand fulﬁllment when the diﬀusion curves of the early- and new-generation products overlap substantially and the release of the new-generation product only moderately increases the customer base. How-ever, partial demand fulﬁllment is less likely to be desirable if the product returns mostly arrive through trade-up programs rather than recycling programs such as free mail-back and physical drop-oﬀ options oﬀered to consumers. Finally, partial demand fulﬁllment, if initiated too late, may escalate the overall consumption of virgin raw materials, making it environmentally undesirable.
Multi-generation product diﬀusion
Closed-loop supply chains