Contract and strategic network design for reverse production systems
Pas, Joshua W.
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A Reverse Production System (RPS) is a network of transportation logistics and processing functions that collects, refurbishes, and demanufactures for reuse/recycle used or end-of-life products. In this thesis, I focus on the RPS strategic decisions of a processor and collectors when the collection network and contracts for materials can be co-designed. The research problem is motivated by the need of material processors to ensure a consistent flow of material from collectors at a cost that will enable them to be competitive with virgin raw materials. The failure to develop a cost-effective collection network can lead to poor overall economics where expensive processing assets are not fully utilized. The three key problems from the processor s point of view are: 1) how to design a strategic collection network; 2) how to be competitive in the collected materials market place when significant investment is at risk; and 3) how to avoid overpaying for materials when collectors are in regions with different volumes and costs. The multiple goals of this research are: 1) to integrate the contract and strategic network design in RPS; 2) to develop contract mechanism designs to improve the performance under incomplete information and study the value of information (complete vs. incomplete); and 3) to introduce and analyze new strategic network models for effectiveness in solution quality and time. Concepts of mathematical optimization, contract theory, and game theory are utilized in proposing models that couple contract and network problems, including lump sum and variable volume contracts.