Reverse Logistics and Environmental Considerations in Equipment Leasing and Asset Management
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Reverse Logistics and Environmental Considerations in Equipment Leasing and Asset Management Manu Sharma 151 Pages Directed by Dr. Jane C. Ammons Today many business enterprises employ capital assets in the form of electronic equipment (e.g., personal computers, workstations and peripherals) in large quantities. As a result of rapid technological progress, these products have a very short life cycle, typically not much more than three or four years. Unfortunately, the disposal of electronic equipment (which contains hazardous materials) presents an environmental problem. In the face of rapid equipment changes, current tax laws and disposal challenges, leasing or procurement contracts with take-back considerations are attractive. For a large electronic equipment leasing company, optimal management of assets supported by good logistics decisions is crucial and may provide a significant competitive advantage. The leasing company tries to maximize operating profits through key decisions associated with the length of leases, efficient utilization of logistics facilities for material flow to and from customer sites, and equipment reuse, refurbishment and disposal actions. In this research, a mixed integer linear programming (MILP) model is developed to facilitate better decisions from the perspective of an electronic equipment leasing company. The model reduces to a linear program (LP) under certain cost assumptions. All computational results are based on the LP version of the model. A case study with representative industry data validates the approach and demonstrates the utility of the model in answering key research questions. Next, important problem uncertainties are identified and prioritized. The effects of these key uncertainties on optimal lease length and product flow decisions are examined in detail via an extended case study. It is also shown how the leasing company can make near-robust leasing decisions in the face of these uncertainties. The computational research results also have implications for policy formulation on electronic waste. The important insights include an understanding of the potential impacts and expected effectiveness of alternative environmental legislation in different geographic areas, and the imposition of negative externalities on other policy realms as a result of this non-uniform approach. Therefore, this research contributes new models and understanding to the intersection of the fields of reverse logistics and equipment replacement, and provides valuable insights to both business asset managers and environmental policy makers.