Cost benefits from standardization of the packaging glass bottles

• Published in: Computers & industrial engineering 2012-04, Vol.62 (3), p.693-702
• Main Authors: Ko, Young Dae, Noh, Injoon, Hwang, Hark
• Format: Article
• Language: English
• Subjects: Breweries; Containers; Cost benefit analysis; Glass bottle; Inventory; Inventory management; Inventory pooling; Mathematical models; Reverse logistics; Standardization; Studies
• ISSN: 0360-8352; 1879-0550
• DOI: 10.1016/j.cie.2011.11.026

► A recycling system with two competing brewers is addressed in this study.► The objective is to analyze the cost benefits obtained from standardization. ► Through mathematical models we consider two situations, before and after standardization of glass bottles. ► The results could be utilized in developing policies for preserving clean environment. This study deals with a recycling system with two competing brewers. It is assumed that they coordinate their manufacturing operations through standardization of their glass bottles for easy implementation of extended producer responsibility (EPR). Immediate benefits from the standardization are three folds. Firstly, the sorting and exchange processes of the bottles collected for reuse by each brewer become no longer necessary. Secondly, cost reduction is achieved through streamlining of collection and reuse processes. Finally, under the stochastic demand of glass bottles their inventory holding costs and lost sales cost are reduced via inventory pooling. Through the development of the mathematical models we determine an optimal operation policy of the two brewers that maximizes the sum of benefits obtained from standardization. Numerical examples are solved to show the validity of the model. Sensitivity tests are also performed to examine the effects of system parameters on the objective function value and decision variables.