Evaluating cost impacts on reverse logistics using an Economic Order Quantity (EOQ) model with environmental and social
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Evaluating cost impacts on reverse logistics using an Economic Order Quantity (EOQ) model with environmental and social considerations Lucas Dias Condeixa1 · Pierry Silva1 · Diego Moah1 · Brenda Farias1 · Adriana Leiras1 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract Societal awareness and legislation changes concerning sustainability have affected how organizations generate value for stakeholders, as well as their processes, products, and public relations. In the context of increasing environmental and social awareness, more studies are needed regarding reverse logistics lot-sizing control taking into account sustainability principles. The contribution of this study is the incorporation of sustainable costs in reverse logistics processes using the Economic Order Quantity (EOQ) model. This paper proposes the extension of a mathematical model for lot-sizing in the reverse logistics that considers environmental, social, and economic parameters. A numerical example and sensitivity analyses are presented to evaluate the sustainable EOQ. Our results indicate that carbon prices have a significant impact on the remanufacturing tax, i.e. the proportion of reusable items in a reverse supply chain that are successfully remanufactured. Additionally, a perspective on the social impact on lot sizing is discussed by noting that high social costs, calculated as a function of ergonomic conditions, can invalidate a high remanufacturing tax. As a consequence, poorly planned labour conditions in reverse logistics can lead to lower recycling rates due to inefficient use of social resources. Keywords Reverse logistics · EOQ · Sustainable log-sizing · Environmental costs
1 Introduction Organizations from different industrial segments have reconsidered their management models in the last decade to adapt sustainability principles as a response to the increasing awareness regarding socio-environmental issues fostered by govern-
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Adriana Leiras [email protected] Pontifícia Universidade Católica do Rio de Janeiro, Rio de Janeiro, Brazil
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ments, institutions, and society (Wahab et al. 2011; Sgarbossa and Russo 2017). Thus, decision-makers have started to consider new business models based on the Triple Bottom Line (TBL) mind-set, which considers not only economic results, but also the socio-environmental consequences of their practices (Elkington 1997). Driven by a scarcity of resources or simply to avoid waste, sustainable operations include reverse logistics aspects. The reverse flow starts when end products used by customers are returned to suppliers who perform sorting or disassembly for recovery, reuse, or disposal (Wang and Hsu 2010). Reverse Logistics can be adopted by organizations as an economic and social strategy (Govindan et al. 2015). Reverse Logistics is considered a push system, in which tasks are defined according to the customers’ recovered products (Wang and Hsu 2010). Nevertheless, research gaps exist in previous theoretical and practical studies, such as the
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