M.S. THESIS PRESENTATION: Diffusion Control of Successive Product Generations with Recycling Potential

 Nilsu Uzunlar

Speaker: Nilsu Uzunlar

Time:June 28, 10:00


Meeting ID: 993 766 4491

Passcode: 525871

Title: Diffusion Control of Successive Product Generations with Recycling Potential

 Abstract: We study the sales planning problem of a producer who sells  two successive generations of a durable good with recycling potential. Certain expensive materials can be recovered from consumer returns of the early-generation product and can be used in manufacturing of the new-generation product. Demands 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 investigate  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. However, 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.

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