An Optimization Model to Determine Flexible Servicing Policies for Sustainable Consumption

The focus of this paper is how an electronics manufacturer may be able to exercise greater control or influence over its consumers' product usage behaviors with the aim of slowing the rate of waste generated. The approach requires manufacturers to extend product life-cycles via better serviceability. We posit that a reduction in the annual volume of consumer products consigned to landfills is an important measure of consumption behavior and would consequently support the larger universal goal of environmental sustainability. Due to intense competition, government regulations, overhead costs, and the fact that equipment may be available on the market at very moderate prices, the effective implementation of optimal service policies is crucial for such a business enterprise and may provide a significant competitive advantage. We measure the effectiveness of mechanisms for sustainable consumption, such as fee-upon-sale penalties. Producers accommodate government fees by establishing servicing options and prices for multiple classes of customers that differ in their willingness to pay to extend the life of the products purchased. The model incorporates dynamic demand of multiple classes of customers, government regulations, and production capacity and uses the flexibility in servicing options to balance supply and demand