An Optimal Purchase Decision of Reusable Packaging in the Automotive Industry

Byungsoo Na, Min Kyu Sim and Won Ju Lee
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Byungsoo Na: College of Global Business, Korea University, 2511 Sejong-ro Sejong City 30019, Korea
Min Kyu Sim: Department of Industrial & Systems Engineering, Seoul National University of Science and Technology, 232 Gongneung-ro, Nowon-gu, Seoul 01811, Korea
Won Ju Lee: Strategic Sourcing–Automotive, Illinois Tool Works, 9629 W 197th St, Mokena, IL 60448, USA

Sustainability, 2019, vol. 11, issue 23, 1-13

Abstract: Among the many components of material delivery operations, packaging is one of the foundations of secure and cost-efficient on-time delivery. Current environmental concerns have increased the popularity of returnable packaging over disposable packaging. This study considers a supply chain in the automotive industry where a single supplier adopts returnable packages for delivery operations to a single recipient. If a returnable package is not available, then an expendable package will be used as a more expensive alternative. Thus, an investment decision on the number of returnable packages must be made prior to launching a returnable packaging system. Using the actual data from an automotive supply chain, this study conducts simulated experiments, under the uncertainty of future demand and required lead time of reverse logistics, to identify the optimal quantity of returnable packages. Sensitivity analysis is then performed by varying the assumptions on operation duration, demand variability, and lead time variability. In general, the results indicate that a greater initial purchase of returnable packages is desirable for longer operation duration, higher demand variability, and higher lead time variability. However, if operation duration is short and the uncertainty is high, then there may be little benefit in using reusable packages. These results generalize the findings from previous studies. This approach and solution can enhance reliable and efficient supply chain operations in the automotive industry and may be applied to other industries where packaging is important and expensive.

Keywords: reusable packaging; supply chain; simulation; optimization; stochastic demands; stochastic lead time (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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