917. Optimizing Collection and Recycling in Plastic Waste Supply Chain – A Game Theoretic Approach
Invited abstract in session WD-42: Recycling supply chains, stream Circular & Sustainable Supply Chains.
Wednesday, 14:30-16:00Room: Newlyn GR.02
Authors (first author is the speaker)
| 1. | MANU MATHEW
|
| Operations Management & Quantitative Techniques, IIM INDORE | |
| 2. | Bhavinkumar Shah
|
| Operations Management and Quantitative Techniques Area, Indian Institute of Management Indore |
Abstract
Managing plastic waste efficiently and sustainably is a major challenge to most emerging economies. To address this, the Indian government implemented Extended Producer Responsibility (EPR), making producers responsible to manage post-consumer plastic waste. Unlike other waste types, the Central Pollution Control Board has mandated recycled plastic use in new products alongside recycling targets. However, recycled plastic pellets (rPET) are often expensive and of lower quality necessitating extra processing resulting into higher operational costs for the manufacturers or brand owners who tend to explore alternative recycling strategies. In this study, we develop a two-echelon model consisting of a brand owner and an external recycler to determine the impacts of PET collection and reuse mandates on their supply chain profit in the centralised and decentralised supply chain. To understand the dynamics between brand owner and external recycler, we propose a Stackelberg game theory model. For the decentralised supply chain, we demonstrate how a two-part tariff improves total supply chain profit. This study shows, higher EPR targets drive outsourcing, raising recycler rPET price. Elevated costs of virgin plastic boost the collection efforts made by brand owner, lowering rPET prices. We discuss various conditions while proposing a well-designed two-part tariff contract that is beneficial to both players to achieve higher supply chain efficiency and profits.
Keywords
- Supply Chain Management
- Game Theory
- Sustainable Development
Status: accepted
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