Rapid changing technologies on the product front has aroused consumer pursue for the latest goods. If the assertion holds true, more products would have shorter life span and this resulted in unwanted products surging high. Therefore, caution is needed for an equal fast response from the waste products. On top of that, products such as consumer durables are at the competitive edge in the market. Manufacturer could merely earn a narrow profit or even lose without a prudent manufacturing planning. To meet the challenges, manufacturers have to select appropriate manufacturing strategies including recovery options, manufacturing processes, workpiece, machinery, and so on. The decision-making process is more challenging today as more aspects are taking into consideration. One of the most common problems faced by decision maker is assessing wide range of alternative options and choosing one based on the conflicting criteria. The section as follows illustrates the process of decision making using simple and logical methods to select the most optimal option by eliminating the unsatisfactory alternatives to better strengthen the existing decision-making procedures.

Decision-Making Process

Decision making is one of the most important actions engaged in planning and selecting strategies to accomplish company goal. Firstly, decision making involves selecting an option from a number of alternatives – reuse, remanufacture, recycle, or discard the EoL product to achieve cost-effective manufacturing. Secondly, decision making is a process that implicates more than simply a final decision among the alternatives – what is the product reliability and impact to the environment if EoL product is reused, remanufactured, recycled, or discarded. Lastly, the decision made is related to action taken that the decision maker engages in to achieve the goal – to develop EoL product recovery production line. A general decision-making process is explained in the following steps (Fig. 10).

Step 1: Defining Problem

Original equipment manufacturer (OEM) is required to manage the EoL product (with the premise of take-back regulations enforced). Within the company each subunit is expected to have targets, such as reducing raw material by adding recycled material from EoL product, finding new market for the recovered product, developing new approach of logistic planning, and so on. Generating these targets becomes the basis for identifying the problem, deciding on the actions taken, and evaluating the outcomes. Overall, understand the problem situation is important as it affects the quality of the decision.

Step 2: Identifying Requirements

Requirements are the conditions that must meet in accordance with the problems set. These requirements are the boundary describing the possible solutions to the decision problem. In order to retrieve the maximum embedded value from the EoL product efficiently, one should determine the condition of the product at point of return. Information such as product design specification and product reliability data are used as benchmark so that the exact quantitative form of requirement can be stated. The quality of a reusable product should be as good as new, however less reliable. As for a remanufactured product, remain or change of dimension is allowed as long as it meets as new condition. With the exact quantitative form of requirement on hand, it can prevent the ensuing debates on judgmental evaluation.

Step 3: Establishing Goal

Goals are the broader statement of desired outcomes toward which effort is directed. In this context, the end goals in decision making are maximizing the profit (via optimal retrieve EoL product value), minimizing the environmental impact, and maximizing (to meet) the product technical condition. 

Step 4: Generating Alternatives

Once the goals have been identified, the next step in the decision-making process is to generate alternatives to the goal. Manufacturer has to search for alternative means of reaching the goals. In this step, relevant information and the likely consequences must be gathered. As such, manufacturer must seek as much information as possible pertaining to the likelihood that each alternative would result in the achievement of various outcomes. For example, manufacturer should consider the solution of setting up a recycling line or engage the third-party recycler could result more cost-efficient. Moreover, the extent of generating alternatives is bounded by the importance of decision, cost, and value of additional information needed to evaluate the alternative and number of people affected by the decision (Zopounidis 2011). The more important, extensive, and greater number of people involve in the decision, the higher cost of evaluating, and lengthy time are required. In this context, the recovery alternatives for EoL product are reuse, remanufacture, recycle, and dispose.

Step 5: Identifying Criteria

With the end goals in mind, criteria among the alternatives can be identified. This step is necessary as the criteria indicate how well each alternative accomplishes the goals. As shown in Fig. 11, the sub-criteria are grouped into a set of related criteria. Grouping the criteria is particularly helpful in scrutiny whether the set of criteria is rightly adapted to the problem. Besides, it is straightforward for the process of calculating criteria weights using some decision analysis methods. Another advantage of grouping the criteria is it aids in visualizing the emergence of higher-level affair.

Step 6: Selecting Decision Analysis Method

There are a number of decision analysis methods for solving a decision problem. Nonetheless, choosing the particular method depends on the complication of the problem as well as the objective of the decision maker. Sometimes it requires integration of few methods to solve a problem. References of further readings are recommended (Munier 2011). In the case study, two subgoals are identified; thereby multi-attribute utility theory (MAUT) is applied to the decision-making analysis.

Step 7: Evaluating Value or Business Model Against Goals

After getting the criteria for each alternative, manufacturer could develop value or business model to evaluate the alternatives. In the process of evaluating the business model, manufacturer should verify (1) feasibility of the alternative, (2) satisfactory of the requirement, and (3) impact to the people. In order to validate the first aspect, manufacturer must confirm that the costs of handling product recovery are always lower than making a new product. The handling process costs for each alternative are considered based on the process flow shown in Fig. 5. Besides, costs that include operational, overhead, procurement, and machine depreciation are calculated using Eqs. 1, 2, 3, and 4. It is necessary to specify the calculations on different cases. For example,

Alternative A: Value = Revenue - Costs
Alternative B: Value = Revenue - Costs - Taxes

If the problem involves certain time period, it is appropriate to use the notion of net present value (NPV) to model the value:

where r is the discount rate and n is the number of years.
In addition to feasibility study on each alternative, manufacturer must achieve the cost-benefit requirement. For instance, cost of remanufacture has to be 50 % lower than a new product price. Finally, the chosen alternative must be acceptable to the person who has to commit to the consequences of the decision.

Step 8: Analyzing the Sensitivity and Uncertainty

Next, sensitivity analysis is worked on the business model to assess the sensitivity of potential changes and errors. This analysis helps decision maker to identify which parameters are the main drivers of the model’s outcome. In the case study, one-way sensitivity analysis is done to assess the impact change in certain parameter that will have on each alternative’s outcome. The model’s results are shown graphically in the form of tornado diagram (Fig. 12). To achieve the most profit by integrating the recovery option to production line, remanufacturing cost, recycling cost, remanufactured product selling price, and recycled material selling price are the key influential parameters. Deterministic analysis is acquired to determine the most influence parameters, followed by stochastic analysis to further optimize the result.

To simplify the process, Monte Carlo simulation is applied to study the uncertainty conditions, followed by plotting the cumulative probability graph. The analyses ease the decision maker to understand the risk profile of each alternative (Fig. 13). The results in the figure show that alternative 1 has the least uncertainty condition, which is also the least risky option. Alternative 2 dominates alternative 3; in other words, the returns (NPV) of alternative 2 are always better than alternative 3. However, alternative 3 tends to have the largest fluctuation (risk) as compared to the other 2 options. Overall, if the decision maker is a risk taker, remanufacture of EoL product will be the best option. As for the risk averse decision maker, setting up the reuse recovery production line should be the safest choice.

Step 9: Evaluating Effectiveness on Decision

The last step in the decision-making process is evaluating the effectiveness (quality) of the decision. All the process can be done using simulation tool based on user’s input, which the simulated results assist in observing the trend. However, in actual case, when an implemented decision does not produce the desired outcomes, revision in part of the process is needed. Typically, inadequate definition of problem is the major flaw. After readdressing the problem formulation, user will go through the same process, thus generating new perspective of analysis.