Implementation of a circular supply chain model using reusable components in multiple product generations

Abstract

The paper deals with a version of Economic Order Quantity (EOQ) and Economic Production Quantity (EPQ) models that considers the reusability of raw materials and components in multiple product generations. With the scarcity of available raw materials and disruptions in supply chains, production companies need to find novel solutions to meet demand. Additionally, waste management of used products is becoming an increasing problem for the environment. Our study presents available solutions for managing end-of-life products and aims to present a cost minimization EOQ/EPQ model. The model considers the use of components extracted from the previous product generation and new components during the production of the new product generation. The study aims to answer the following research questions (i) what is the optimal strategy for the company for the number of cycles of extracted and new components during the production? (ii) Which variables affects the optimal strategy of the company? The presented model allows companies to use the value created for a longer period, and reduces the amount of raw material extracted and waste generated.

Keywords

• Circular economy
• Sustainability
• Supply chain
• Quality