The International Journal of Logistics Management

A reverse logistics inventory model for plastic bottles

Nouri Matar Mohamad Y. Jaber Cory Searcy

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Nouri Matar Mohamad Y. Jaber Cory Searcy , (2014),"A reverse logistics inventory model for plastic bottles",
The International Journal of Logistics Management, Vol. 25 Iss 2 pp. 315 - 333
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A reverse logistics inventory

model for plastic bottles

Reverse logistics
inventory model

Nouri Matar, Mohamad Y. Jaber and Cory Searcy

Department of Mechanical and Industrial Engineering,
Ryerson University, Toronto, Canada

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Abstract
Purpose The purpose of this paper is to present an original model for the production-recyclingreuse of plastic beverage bottles.
Design/methodology/approach It is assumed that discarded two-liter plastic polyethylene
terephthalate (PET) bottles are collected from the market. The bottles are then sorted into non-contaminated
and contaminated streams. The non-contaminated PET bottles are either remanufactured or used as regrind
mixed with virgin PET to produce new bottles to satisfy varying demand. The contaminated bottles are
either sold to industries using low-grade plastic or disposed of in a landfill. Numerical studies are used
to illustrate the behaviour of the model, with an emphasis on exploring the reduction of total system cost
and the amount of bottles going into a landfill.
Findings Numerical analyses conducted on the model found that the amount of bottles collected had
the largest influence on the outcome of the total system unit time cost. Alternative materials to PET are
surveyed and used to demonstrate a significant reduction in the cost of landfill disposal due to their
more rapid degradation in the landfill.
Research limitations/implications Several areas for future work are highlighted. Potential
modifications to the model could focus on accommodating bottles made of material other than plastic,
incorporating the effects of learning on manual tasks, and on accommodating shortages or excess inventory.
Originality/value The model incorporates several unique aspects, including accounting for the
cost of land use and associated environmental damage through the calculation of a present value that
is charged to the manufacturer.
Keywords Reverse logistics, Recycling, Production, Inventory management, Waste disposal, EOQ,
PET, Biodegradable plastic
Paper type Research paper

315
Received 3 December 2012
Revised 12 April 2013
Accepted 15 July 2013

1. Introduction
Sustainable development has become a well-established goal in governments and
organizations around the world. At its root, sustainable development requires that
the needs of the current generation are met without compromising the ability of
future generations to meet their own needs (World Commission on Environment
and Development, 1987). This requires that the economic, environmental, and social
implications of human activity are considered in decision making. However, despite
many advances, a number of challenges remain in meeting sustainable development
goals. One of the most prominent challenges of sustainable development is finding
ways to reduce the huge quantities of waste generated through human activity.
Waste disposal in landfills results in numerous hazards and damage to the natural
environment, wildlife, and humans (Tchobanoglous et al., 1993). There are many
An earlier version of this paper was presented at the 9th Supply Chain Management Symposium
held in Toronto, Canada in September 2011. The first and second authors would like to thank the
Social Sciences and Humanities Research Council of Canada (SSHRC)-Canadian Environmental
Issues- for providing funding for this research. The third author thanks the Natural Sciences and
Engineering Council of Canada (NSERC) for supporting his research.

The International Journal of Logistics

Management
Vol. 25 No. 2, 2014
pp. 315-333
r Emerald Group Publishing Limited
0957-4093
DOI 10.1108/IJLM-12-2012-0138

IJLM
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316

factors that may influence the quantity and composition of solid waste generated,
including geographic location, season, demographics, population density and size,
income levels, purchasing patterns, public attitudes, and legislation; among other
factors. However, despite increasing attention to these issues, significant amounts
of waste continue to be generated. Before recycling, approximately 243 million tons of
municipal solid waste was generated in the USA in 2009 (United States Environmental
Protection Agency (US EPA), 2010).
In an effort to reduce the amount of material disposed of in landfills, efforts to recycle,
remanufacture, or reuse discarded and obsolete products have been steadily growing
over the last several decades. Many products now boast recycling rates of over 50 per
cent, including auto batteries (95.7 per cent), office paper (74.2 per cent), and aluminum
cans (50.7 per cent) (US EPA, 2010). However, for other types of products, recycling rates
remain lower. In one prominent example, the recycling rate for polyethylene terephthalate
(PET) bottles and jars in the USA is just 28.0 per cent (US EPA, 2010). Given that PET
bottles and jars account for 2,570,000 tons of waste generated annually in the USA (US
EPA, 2010), efforts to increase the recycling rate for these products are needed.
The disposal of plastic bottles into landfill sites has high environmental and social
costs as it uses up useful land and disturbs the eco-system. For example, the
decomposition of PET bottles in a landfill leaches harmful chemicals (e.g. BPA or
bisphenol A) into the water table. BPA consumption by humans and wildlife disturbs
cell metabolism (Crisp et al., 1998), creates neurological issues (Palanza et al., 2008), and
increases the risk of cancer in males and females (Prins et al., 2008; Brisken, 2008).
Additionally, plastic beverage bottles take approximately 450 years (Ocean
Conservancy, 2005) to fully biodegrade in a landfill. This leads to land use concerns.
In response, local government units and municipalities are implementing stringent
laws to restrict the disposal of plastic bottles and encourage the development of more
advanced technologies and systems for plastic bottle recycling.
To help address these issues, this paper focuses on the remanufacturing of discarded
PET plastic beverage bottles and the use of recycled material in the production of new
ones. The aim of a reuse and recycling system is to reduce the amount of bottles going
into a landfill. Given the large percentage of PET bottles that are currently disposed of in
a landfill, this would represent an important advance towards sustainable development.
The supply chain system in this paper has two separate generic entities: collection and
manufacturing. The first entity collects the bottles produced by the manufacturer that
are discarded by the users and sorts them into three streams: non-contaminated whole
bottles, non-contaminated damaged bottles and contaminated bottles. The contaminated
bottles are then sorted into two streams. The non-useable badly contaminated bottles are
sent to the landfill (e.g. Thompson et al., 2009; Gironi and Piemonte, 2011; Foolmaun and
Ramjeawon, 2012), while the remaining ones are sold to industries that use low-grade
plastic material (such as the construction industry). The non-contaminated whole
and damaged bottles are then transported to the manufacturing entity. In this system
the whole bottles are remanufactured through a process where they are de-labelled,
cleaned and sanitized, polished and relabelled. The damaged bottles are de-labelled, cleaned,
grounded into flakes and processed. The pellets/material produced are then mixed with
the virgin PET pellets (material of origin) to generate new bottles. The remanufactured
bottles plus the newly produced bottles will achieve the demand requirements dictated
by the market.
This paper contributes to the literature by developing a model to manage inventory in
a closed-loop supply chain for plastic bottles. The available models in the literature are

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generic and do not specify the type of the product considered (e.g. Richter, 1996; Dobos
and Richter, 2004, 2006; El Saadany and Jaber, 2010). They also consider that a product
is recovered (e.g. remanufactured) as a whole unit (e.g. El Saadany and Jaber, 2011), which
is an unrealistic assumption. The models in the literature also assume that all units
can be recovered (e.g. remanufactured, recycled) indefinitely (El Saadany et al., 2013),
which is also an unrealistic assumption. The existing studies also ignored the cost of
waste disposal and social costs in rehabilitating landfill sites. This paper contributes
to the inventory management literature on production, remanufacturing and waste
disposal models by: first, assuming that not all items collected for recovery are suitable
for recovery since portions of them are remanufactured, recycled and reused, second,
recognizing the disposed items either go to the landfill or are sold as low-grade raw
material for use in other processes, e.g. in the construction industry (Siddique et al., 2008;
Gaggino, 2012), third, considering the social costs of rehabilitating landfill sites, and
fourth, considering the option of using biodegradable material and studying how going
green may impact the behaviour of the model developed. These are all unique
contributions that fill existing gaps in the literature. The importance of the points raised
here have been argued in Bonney and Jaber (2011), who discussed that there is a dire
need to design more environmentally responsible inventory and logistics systems. This
paper contributes to this call and line of research.
2. Literature survey
The need to reduce the cradle to grave environmental impacts associated with the
design, sourcing, production, use, reuse, recycling, and disposal of products has been
widely recognized in the literature. For example, Ilgin and Gupta (2010) recently
completed a review of over 500 articles published on environmentally conscious
product design, reverse logistics, closed-loop supply chains, remanufacturing, and
product disassembly. The rapidly growing body of research on life cycle assessment,
design for environment, industrial ecology, and sustainable supply chain management
similarly underlines the need for more sustainable development of products. Several
studies that specifically investigate production-recycling systems can be found in the
literature. These studies will be briefly examined and compared to the reverse supply
chain inventory model of this paper. Also, articles that demonstrate the use of recycled
PET material in different industries and the use of alternative materials that are
environmental friendly will similarly be discussed and compared.
Dobos and Richter (2004) developed a production-recycling model where the
manufacturer serves a stationary product demand and is willing to buyback a portion of
the used products to recycle and/or to dispose of them. Newly produced and recycled
items were assumed to have indifferent quality. Their production, inventory and
recycling policy shifted between two extremes, either produce or recycle all. In a
follow-up paper, Dobos and Richter (2006) extended their earlier model to consider
whether the quality of a collected and returned item is suitable for recycling. Unlike their
earlier finding (Dobos and Richter, 2004), they found that when quality is accounted for a
mixed policy of production and recycling was found to be economical. Maity et al. (2007)
developed a similar model to Dobos and Richter (2004), but with fuzzy holding costs.
They assumed that demand is price dependent and that price is dependent on the
inventory level. El Saadany and Jaber (2010) investigated a similar model to that of Dobos
and Richter (2006) where they assumed that the collection rate is price and quality
dependent. Their results also supported a mixed strategy of production and recovery
(recycle, remanufacture) policy. Similar works include, but are not limited to, Li et al.

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(2008), Oh and Hwang (2006), and Maity and Maity (2009). The economic order quantity
(EOQ) model (Harris, 1990) has been the basis for these models.
As noted in the introduction, BPA has been proven to have adverse effects on human
beings and wildlife. Therefore, it is wise that alternative materials be explored for the
use of creating plastic bottles. For example, Kinoshita et al. (2009) developed and tested
a green composite made of woodchips, bamboo fibres, and biodegradable adhesive
material, which is resistant to water. Samarasinghe et al. (2008) created and tested
a biodegradable plastic composite made from corn gluten meal (CGM) that can be
blended with synthetic biodegradable polyester and wood fibre. This allows the
material to degrade in soil in a matter of months. Other material was made from
biodegradable composites such as sunflower oil cake (Rouilly et al., 2006), hardwood
sawdust (Schilling et al., 2005), and soy protein-starch (Otaigbe et al., 1999). The
rationale is to develop material that does not leach harmful chemical substances into
the soil and water tables and that degrades at a much faster rate than PET in order to
increase the turnover of land.
While the existing literature is abundant and growing, there are many areas in need
of further research. For example, Dobos and Richter (2004 and 2006) do not consider that
newly produced products/items are created from recycled material that is mixed with
virgin material. The models proposed by Li et al. (2008) and Maity and Maity (2009)
suffer from a similar deficiency. Furthermore, the models proposed by Dobos and Richter
do not account for the costs of waste disposal related to the use of land and the effects on
the environment due to landfilling of unrecyclable material. In their model, Oh and
Hwang (2006) assume that all collected materials can be recycled or remanufactured.
Non-serviceable items are not considered and their model therefore does not account for
waste disposal costs. None of the existing models consider the possibility of reducing the
quantity of bottles disposed of in a landfill by selling contaminated bottles to industries
that use low-grade plastic material. Given the research demonstrating the use of recycled
PET in the production of a wide variety of products such as polymer concrete (Tawfik
and Eskander, 2006), moulded automotive carpets (Gurudatt et al., 2005), coating resins
(Kawamura et al., 2002), packaging trays (Griffen, 1996), and polyester concrete (Rebeiz,
1996), this is an important oversight. Finally, the use of alternative materials in the
production of the PET plastic bottles in production-recycling-reuse models has not been
widely explored. The composite materials discussed above all relatively rapidly degrade
in a landfill and reduce complications associated with BPA.
The model proposed in this paper seeks to address these gaps in the existing literature.
The model explicitly considers newly produced products/items that are created from
recycled material that is mixed with virgin material. The proposed model not only recycles
whole non-contaminated plastic bottles, but also uses non-contaminated damaged bottles
in the production of new bottles. Furthermore, the cost of the long land use by slow
degrading plastics is brought back to the present to be charged to the bottle manufacturer.
This cost includes real-estate rental, land rehabilitation and a penalty for damage to the
environment. Additionally, this paper explores the effects of using biodegradable material
on the inventory system. These unique contributions provide needed insight into the
development of more sustainable production, reuse, and recycling systems.
3. The mathematical model
Disposing plastic bottles into a landfill causes harm to human and wildlife health, as
well as to the natural environment. These harmful effects could be reduced through
increased recycling of these plastics. In this section, a model will be developed where

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the recycling of two-liter plastic PET bottles is considered. The development of the
model and its assumptions will now be introduced.
3.1 Notations and assumptions
3.1.1 Notations.
y
the percentage of bottles collected, where 0oyo1
a
the percentage of non-contaminated bottles that can be used for
remanufacturing via regrinding and using it as raw material, where 0oao1.
b
the percentage of whole non-contaminated bottles that can be used for
remanufacturing as whole bottles, where 0obo1
f
the percentage of contaminated bottles that can be sold as low-grade material,
where 0ofo1
D
the demand rate (unit/unit of time)
Knss setup cost for bottle collection ($)
Kr setup cost for remanufacturing ($)
Krm setup cost for virgin material and regrind mixing ($)
K P setup cost for production/manufacturing of new bottles ($)
KSc setup cost for contaminated bottle sort ($)
KLF Setup cost to prepare the ground for bottle disposal ($)
CLs labour cost for sorting bottles ($/unit of time)
CCo labour cost for bottle collection ($/unit of time)
CLr labour cost for remanufacturing ($/unit of time)
CMat material cost for remanufacturing ($/unit of time)
Cvm cost for virgin material per cycle ($/unit of time)
CLp labour cost for bottle production ($/unit of time)
CLSc labour cost for contaminated bottle sort ($/unit of time)
CLF labour cost for disposing bottles in the landfill ($/time)
Cre the real-estate rental cost per bottle ($/time)
Crh the rehabilitation penalty cost per bottle ($/time)
hnss carrying cost per bottle from collection and sorting per cycle-period ($/unit/
unit of time)
carrying cost per remanufactured bottle per cycle-period ($/unit/unit of time)
hr
hrm carrying cost per bottle from virgin material and regrind mixing per
cycle-period ($/unit/unit of time)
h p carrying cost per newly produced bottle per cycle-period ($/unit/unit of time)
hsc carrying cost per contaminated bottle per cycle-period ($/unit/unit of time)
slope of depleting demand rate for remanufactured bottles ($/unit of time)
lr
lrm slope of depleting demand rate for regrind and virgin material mix ($/unit of
time)
l
the decay rate of PET material (percentage/unit of time)
P
production rate for producing new bottles (unit)
Qr the quantity of bottles remanufactured (unit)
Qvm the material needed to be mixed with the regrind in order to produce the
number of bottles required to supplement the number of remanufactured
bottles (units/unit of time)
RM the quantity of regrind and virgin material mix in a cycle (units)
Q P replenishment order quantity in each cycle (units)
BLf the amount of bottles that are to be disposed of into a landfill after sorting
during a cycle (units)
T
cycle time (unit of time) (decision variable)

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3.1.2 Assumptions. Several assumptions have been made in the development of the
model:
(1)

The demand for the bottles is assumed to be constant for each cycle but may
vary from one cycle to another.

(2)

It is assumed that demand is always met from the newly produced and
remanufactured bottles. Therefore, this model assumes neither shortages nor
excess inventory of bottles.

(3)

In this model if the contaminated bottles are sold to the low-grade plastic
industries, any profit generated goes to the collection company. These bottles
are given to the Bottle Collection Company in exchange for transporting the
non-contaminated bottles to the manufacturing company. This is reasonable
given that the firm would like to remain sustainable by saving on
environmental costs related to transportation (Wong, 2010).

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320

The above assumptions are similar to those made in the literature (e.g. Ferrer, 1997;
El Saadany and Jaber, 2010, 2011; El Saadany et al., 2013).
3.2 Flow diagram for a plastic bottle recycling system
The production, remanufacturing, recycling, and waste disposal system for plastic
bottles investigated in this paper is depicted in Figure 1. Bottles are collected from
the market at a rate yD; and then sorted by the Bottle Collection Company into
non-contaminated bottles at a rate ayD and contaminated bottles at a rate (1a)yD.
The non-contaminated bottles are sorted furthermore by the Bottles Collection Company
into whole non-contaminated bottles and damaged non-contaminated bottles. The
non-contaminated bottles are then transported to the Bottle Manufacturing Company
Process D
Production
Qp
Recycling/Reuse/Remanufacturing
Material Mixing
V.Material and
Remanufacturing
Regrind Mixing
(1 ) D

Qvm

D Process B

Process C
(0 <  < 1)

Serviceable

D
Market

Qr
(0 <  < 1)
D

Process A
Bottle Collection Company
D
(0 <  < 1)

NonServicable
Stock

Bottle Manufacturing Company

(1 ) D
Process E

(0 <  < 1)

(1 ) (1 ) D

Figure 1.
Flow diagram
for plastic bottle
recycling-reuse system

(1 ) D

Process F
Landfill / disposal

Low Grade Market

Contaminated bottle sort and Landfill disposal

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where the non-contaminated whole bottles are remanufactured at a rate bayD and
the damaged non-contaminated bottles are used as regrind at a rate (1b)ayD in the
production of new bottles. The regrind is mixed with virgin material, Qvm, to produce
the new bottles. The production of new bottles, Q p, plus the remanufactured bottles, Qr,
divided by the cycle time T equals the required demand rate D in one cycle. The
contaminated bottles are sorted into two streams: badly contaminated bottles which are
disposed of in a landfill at a rate (1f)(1a)yD and bottles that can be sold to industries
(such as various industries within construction) that use low-grade plastic material at
a rate f(1a)yD. Processes A to F are indicated in Figure 1. The operation costs of these
processes will be discussed in detail in 3.3.
3.3 The model
The model presented in this section is different from those in the literature in that it
uniquely considers producing, recycling, and remanufacturing in one model. It is also
unique in its treatment of the disposed items that are classified as either low-grade
items suitable for a secondary market (e.g. construction industry) or for the landfill.
In addition, this paper is also unique in that it accounts for landfill rehabilitation
and penalty costs for disposing waste. Unlike the literature in this area (e.g. Dobos and
Richter, 2004, 2006; El Saadany and Jaber, 2010, 2011; El Saadany et al., 2013), this
paper explores the benefits of using more environmentally friendly (biodegradable)
material. This is an interesting initiative that may pave the way towards more
challenging and interdisciplinary research focused on integrating material science and
engineering design into inventory, supply chain and reverse logistics management
decisions. This is a challenging future research venue that the authors will pursue.
Six processes were considered in the development of the mathematical model. It is to
be noted that the cycle time used in these processes is the same even though the bottle
collection will begin earlier than the production. However, for coordination purposes,
the length of the cycle for collection is the same as that for production. This is done in
order to correctly calculate cost allocation. Although a logistics system like the one
described in Figure 1 may consist of entities that are independently owned, the
literature reveals that the joint economic lot sizing problem produces a lower system
total cost than independently optimising the cost of each entity (e.g. Jaber and
Zolfaghari, 2008; Glock, 2012). So, this paper considers a centralized lot sizing policy
where the cycle time, T, is common for all processes. A decentralized lot sizing policy is
surely worth investigation but is beyond the scope of this paper. A future work that
addresses this limitation is possible. The six processes are described next.
3.3.1 Process a: non-serviceable stock (Bottle Collection Company). The Bottle
Collection Company collects the bottles produced by the manufacturer and discarded by
the users at a rate yD, where the accumulated quantity during a cycle is yDT. The Bottle
Collection Company sorts the bottles into three streams: non-contaminated whole bottles
and damaged bottles at a rate ayD and contaminated bottles at a rate (1a)yD. During
the sorting process a vision system is used to select the required bottles that are sent to
the bottle manufacturing company. The inventory total cost per unit of time (i.e. the total
process cost divided by the cycle time) for process A is given as:
TCUnss

Knss
yDT
CLS CCO hnss
2
T

Equation (1) is convex since d2 =dT 2 TCUnss 2knss =T 3 , 8 T40 since Knss40.

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3.3.2 Process B: remanufacturing. The quantity of bottles remanufactured in one

cycle is Qr bayDT lrT and it depletes to zero at a rate lr during t2. Prior to
depletion, these bottles maybe held for t1 time units prior to being remanufactured,
where T t1 t2. The non-contaminated whole bottles are remanufactured by a
customized automated or semi-automated process where they are de-labelled, cleaned
and sanitized, polished and relabelled. Elaborating the technology required to perform
this process is beyond the scope of this paper. The inventory total cost per unit of time
for process B is given as:

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TCUr



Kr
hr Qr Qp Q 2r Q 2r
CLr CMat


T
T
D
D 2lr

where Q P PT. Equation (2) is convex since d2 =dT 2 TCUr 2Kr =T 3 8 T40 since
Kr40.
3.3.3 Process C: regrind and virgin material mix. The quantity of regrind
((1b)ayDT) and virgin (QvmT) material mix in one cycle is RM which is depleted full
at a rate lrm over t2. This material may be held for a period t1 prior to mixing, where
T t1 t2. The damaged non-contaminated bottles are recycled where they are
de-labelled, cleaned, ground into flakes and processed to produce new and improved
quality PET pelletized material. The inventory total cost per unit of time for process C
is given as:

TCUrm



Krm
hrm RMQp RMQr RM 2
CLrm Cvm


T
T
D
D
2lrm

where RM Qvm T 1  bayDT 1  abyDT and Qvm D  bayD 

1  bayD 1  ayD with Q P and Qr being functions of T as denoted earlier.
Equation (3) is convex since d2 =dT 2 TCUrm 2Krm =T 3 8 T40 since Krm40.
3.3.4 Process D: bottle manufacturing. Q P units of new bottles are replenished at a
rate P over T, Q P PT. New bottles are produced by a two-step moulding process
which requires two separate machines; one to make the pre-form of the bottle and the
second to inflate the shape of the bottle by using stretch blow moulding. Therefore
once the pre-form is made it is transferred to the stretch blow moulding stage to create
the final shape of the bottle. The inventory total cost per unit of time for process D is
given as:
TCUp

Kp
Qp
CLp hp
T
2

Similar to Equations (1)-(3), Equation (4) is convex since d2 =dT 2 TCUp 2Kp =T 3 8
T40 since K p40.
3.3.5 Process E: contaminated bottle sort (Bottle Collection Company). The
contaminated bottles are sorted into two streams where a percentage of the bottles will
go to the landfill and the other percentage will be sold to industries that use a lower
grade of plastic material. However, in our case we will only be concerned with the cost
of the bottles that go to the landfill. Contaminated bottles for disposal are sorted at a
rate L and the amount of contaminated bottles to be disposed of in the landfill is BLf,

where L (1f)(1a)y and BLf LDT. The inventory total cost per unit of time for
process E is given as:

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TCUSc

KSc
BLf
CLSc hSc
T
2

Equation (5) is convex since d 2 =dT 2 TCUSc 2KSc =T 3 40 8 T40 since KSc40.
3.3.6 Process F: landfill disposal cost. Since the bottles placed into the landfill are
assumed to decay exponentially, a cost equation needs to be developed for each time
quantities of bottles are placed into the landfill. Quantities of bottles that are placed
into the landfill take time to decompose to zero (quantity); therefore as the bottles
decompose in the ground the cost must be captured for the use of the real-estate and for
the admitting of chemicals into the environment. Therefore, the present value is used to
bring back the total cost at the end of every cycle (T ).
Since exponential decay can describe the decomposition of material in ecological
systems (Kot, 2001) it will be applied in this paper to capture the decay of two-Liter
plastic bottles when disposed of in a landfill at the end of each cycle. We define N(t) as
the quantity at time t and l is the decay rate, where N t N0 elt and N0 is the initial
disposed quantity (i.e. the quantity at time t 0).
The use of the land to dispose bottles until they fully decompose has a real-estate
rental cost per bottle which is denoted as Cre and a rehabilitation and penalty cost per
bottle which is denoted as Crh. Using the present value approach, the cost for land
use, rehabilitation and environmental damage of disposing bottles into a landfill
are brought back at the end of every cycle. Defined as N t N0 elt , Cre is the
real-estate rental cost per bottle and Crh is the rehabilitation and penalty cost per
bottle. The single amount future-value of Cre Crh N t Cre Crh N0 elt .
Also, the amount of plastic bottles disposed in the landfill by the end of cycle T is N0,
where N t N0 eltT ) N T N0 elTT N0 . So, N t N0 eltT ; t 2
T; 1 is equivalent to N t N0 elt ; t 2 0; 1. The inventory total cost per unit of
time for process F is given as:
TCULF

KLF
CLF

Z1

Cre Crh N0 eit elt dt

KLF
Cre N0
Crh N0
CLF

6
T
i lT i lT

where N0 1  f1  ayDT. Equation (6) is a continuously decreasing function

in T since d=dTTCULF KLF =T 2 o0 and d2 =dT 2 2KLF =T 3 40 8T40
since KLF40.
3.3.7 Closed form solution. The total system unit time cost is the sum of Equations
(1)-(6) and is given as:
TCU TCUnss TCUr TCUrm TCUp TCUSc TCULF


Knss
yDT Kr
hr Qr Qp Q2r Q2r
CLS CCO hnss
CLr CMat

T
T
T
D
D 2lr
2


Krm
hrm RMQp RMQr RM 2
Kp
Qp

CLrm Cvm


CLp hp

T
T
D
D
2lrm
T
2
 
KSc
BLf
KLF
Cre N0
Crh N0
CLSc hSc

CLF

T
2
T
i lT i lT

Reverse logistics
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323

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324

where Qr bayDT UDT lr T, Qp PT 1  UDT, RM 1  abyDT

1  UDT lrm T, BLf N0 1  f1  ayDT LDT.
Substituting these terms in Equation (7), differentiating Equation (7) w.r.t T, setting
the first derivative equal to zero, and solving for T we get:
s r
2K
2K


T
DH
D hnss y hr U hrm hp 1  U hSc L


where K Knss Kr Krm K p KSc KLF . Note that it was shown before that
Equations (1)-(5) are convex in T, with the exception of Equation (6) which is a
continuously decreasing function in T. The sum of convex functions is a convex
function suggesting that the sum of Equations (1)-(5) is a convex function. Note that
a function to be convex is formed by the sum of continuously decreasing and
increasing functions of the decision variable, so adding a continuously decreasing
function to the sum will not affect convexity. Therefore, Equation (7) is convex for
every T40. It is clear that the cycle time T in Equation (8) increases (decreases) as K
increases (decreases) and/or D and/or H decreases (increases). This is a typical
behaviour as Equation (8) is similar in form to the EOQ model. Substituting Equation
(8) in Equation (7) along with the necessary terms, Equation (7) can then be written as:
TCU 

p
Cre Crh LD
;
2KDH C
i l

where C CLS CCO CLr CMat CLrm Cvm CLp CLSc CLF . The total cost
in Equation (9) increases as the following (or any of them) terms: K, D,H, CLS, CCO,
CLrm, Cvm, CLp, CLSc, CLF, Cre, and Crh increase (s), or as i and(or) l decrease(s).
4. Numerical results
This section provides numerical examples to illustrate the behaviour of the
mathematical model and discusses the results. Consider a production-recycle-disposal
inventory system with D 50,000 bottles/month and the input parameters listed
in Table I. Not included in Table I are the unit holding costs for the five processes
where bottles of different grades are held, which are hnss 0.03 and hr hrm
h p hSc 0.02. Using the input parameters listed in Table I, the optimal solution
was found from Equations (8) and (9) for values of y, a, b, and f of 0.25, 0.5, and 0.75.
The results are summarized in Table II.
The results from Table II show that the percentage of bottles remanufactured, b,
does not affect the total system cost per unit of time, TCU, as significantly as the
percentage of bottles collected y, the percentage of non-contaminated bottles a and
the percentage of contaminated bottles sold to industries that use low-grade material f.
For example, when y b a 0.25 (Examples 1-3), TCU decreases by about 20
per cent (from 17,761 to 14,223) when the percentage of contaminated bottles that can
be sold as low-grade material, f increases from 0.25 to 0.75 of the demand rate. When
y a f0.25 (Examples 4-6), the decrease in TCU is insignificant (from 17,761 to
17,715) when b increases from 0.25 to 0.75 of the demand rate. Also, it was observed
that when the percentage of bottles (of all grades) collected, y, has the highest
coefficient it has the most effect on TCU. For example, when b a f 0.25 (Examples
10-12), TCU increases by about 64 per cent (from 17,761 to 29,070) when y increases

Description

Knss

All setup costs included are aggregates of three primary costs: preparation, equipment
maintenance (collection trucks and machinery) and overhead. It is assumed that the
prep-process takes 2 hours labour at $20/hr, maintenance $80 per set-up and $180 per
set-up for space rental to house the equipment and administration. This gives a total of
$300 per set-up
It is assumed the preparation process takes 1 h labour at $20/hr, maintenance $30 per
set-up and space rental to house the equipment and administration at $75 per set-up to a
total of $125 per set-up
It is assumed to take 2 hours labour at $20/hr, maintenance $40 per set-up and space
rental to house the equipment and administration at $120 per set-up. Therefore the total
of this set-up is $200
It is assumed the preparation process takes 1 h labour at $20/hr, maintenance $30 per
set-up and space rental to house the equipment and administration at $75 per cycle.
This gives a total of $125 per set-up
It is assumed the prep-process takes 1 h labour at $20/hr, maintenance $20 per set-up
and space rental to house the equipment and administration at $60 per set-up to a total
of $100 per set-up
This setup cost includes machine rental and their operators. It is assumed the labour is
3 hours at $40 per set-up; and machine rental $80 per set-up. Therefore, this total cost is
$200 per set-up
This labour cost includes loading collected items on a conveyor belt and collection of the
sorted bottles and the operation of the vision system. It is assumed in one hour 15,000
units can be loaded on a conveyor belt and only 10% are manufacturers bottles. This
means in one hour 1,500 bottles are collected. Since this operation requires 2 operators,
one at the loading and one at the receiving end, the labour cost is (2 $10)/1,500 $0.013
per bottle and the cost for the vision system is $0.002 per bottle. This gives a total of
$0.015 per bottle; when multiplied by yD this gives the labour cost for sorting bottles
after collection per cycle
This labour cost includes a truck and two labourers. It is assumed the cost of the truck
and two labourers are $60 per hour and the truck collects 60,000 items in an hour in
which 10% are the required brand of bottles, this cost would be $0.01 per bottle; when
multiplied by yD this the gives labour cost for bottle collection per cycle
Here it is assumed that 2 labour hours at $10 dollars per hour are required to clean,
sanitize and pack 200 bottles per hour. Therefore the labour cost is $0.1 dollars per
bottle. Add to this cost $0.03 per bottle for the cost to run the machinery. This gives a
running cost of $0.13/bottle; when multiplied by bayD which equals lr this gives the
labour cost for remanufacturing per cycle
This process involves cleaning agent/solvent, clear coat polish and labels. It is assumed
$2 is required for the solvent and clear coat for 200 bottles and the label is $0.01 per
bottle. Therefore, the material cost is $0.02 per bottle; when multiplied by bayD this
gives the material cost for remanufacturing per cycle
This process involves de-labelling the bottles, cleaning and grinding the material into
flakes and processing it through a Recycling line- recoSTAR PET machine which
produces new and improved quality PET pelletized material due to solid state
polycondensation. Consider 1.5 labour hours at 10 dollars per hour required to process
1000 bottles; and 5 dollars per hour for the cost to run the machinery for the 1000 bottles
per hour. Then the total cost is $0.02 per bottle; when multiplied by [Qvm (1b)ayD]
which equals lrm. This gives the labour cost for regrind and mixing per cycle
This is a variable amount and is based on the demand. However, the material required
for supplementing the re-grind material to produce new bottles is considered to be $0.03/
bottle. For the cycle this cost is obtained from $0.03 multiplied by Qvm

Kr
Krm

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Reverse logistics
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Parameter

KP
KSc
KLF
CLs

CCo

CLr

CMat

CLrm

Cvm

(continued)

325

Table I.
Input parameters for
numerical example

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Parameter

Description

CLp

This involves a two-step moulding process which requires two separate machines; one
to make the pre-form of the bottle and the second to inflate the shape of the bottle by
using stretch blow moulding. Each machine is operated by a skilled operator at $15.00
per hour. Assuming this process can produce 240 bottles per hour which gives $0.125/
bottle, plus $0.025/bottle for the cost to run the machines and labelling. Then the total
cost is $0.15 per bottle; when multiplied by [Qvm (1b)ayD] this gives the labour cost
for bottle production/manufacturing
This process requires more labour work than the prior sorting process because it
requires more time to determine if a bottle is badly contaminated and will be disposed in
the landfill or if a bottle is contaminated but can be sold to industries that require a lower
grade of material. Although this process does not require a vision system, its longer
inspection time justifies charging the same as the other sorting process i.e. $0.015 per
bottle; when multiplied by (1f)(1a)yD this gives the labour cost for contaminated
bottle sort
This process involves an operator placing these contaminated bottles together with
other disposables of different unrelated processes into a landfill. Although the number of
badly contaminated bottles to be disposed of in the landfill is determined, it is difficult to
estimate how many bottles will be part of each process. Therefore a flat fee of only $25
dollars is charged per disposal
It is assumed that a square foot of rural land can be rented for $0.5. It is also estimated
that four bottles occupy approximately one cubic foot and if bottles are piled on the
average 10 feet high, then one square foot of land carries 400 bottles. Therefore the
real-estate rental cost is $0.00125/bottle/month
The cost of the rehabilitation of the land per bottle will be similar to the real-estate rental
cost per bottle. However, a penalty for the effect on the environment is added and
assumed to be three times the cost of rehabilitation. Therefore the cost of rehabilitation
and the penalty will be $0.005 bottle/month. It is to be noted that a good approximation
of the cost of the effect of disposing bottles in a landfill on the environment is extremely
difficult to evaluate therefore we have assumed three times the cost of rehabilitation
(1 for cleaning the water, 1 for cleaning soil, 1 for protecting wildlife)
It is estimated that it takes approximately 450 years for plastic beverage bottles to fully
biodegrade in a landfill. Using the exponential decay half life where l ln(2)/t, the decay
rate (l) is found to be 0.0256% per month

326

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CLSc

CLF

Cre

Crh

l
Table I.

from 0.25 to 0.75 of the demand rate. The systems best performance occurred when
y and b a f 0.75 where TCU 12,672 (Examples 34).
Upon further analysis of Table II, it is also evident that the cost of landfill
disposal (TCULF) can have a significant effect on the total system unit time cost
(TCU). As the amount of bottles placed in the landfill increases the cost of landfill
disposal increases. By examining the process unit time cost equation of landfill
disposal (Equation 6), an increase in the decay rate l causes a decrease in TCULF.
The current material being used to produce plastic beverage bottles is PET which
yields a very low value for the decay rate l which is 0.000256/month. Therefore, in
order to increase the decay rate and reduce the process unit time cost of landfill
disposal (TCULF), alternative materials must be used which take less time to
biodegrade in a landfill. As previously noted, Samarasinghe et al. (2008) created and
tested biodegradable plastic composites from CGM while Otaigbe et al. (1999)
experimentally developed and tested a biodegradable soy protein-starch plastic
(SPSP). Both of these alternative plastic materials represent intriguing possibilities
even though further testing would be required for applicable use in the production of

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Example
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36

0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.5
0.75
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.25
0.5
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.25
0.5
0.75

0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.5
0.75
0.25
0.25
0.25
0.5
0.5
0.5
0.5
0.5
0.5
0.25
0.5
0.75
0.5
0.5
0.5
0.75
0.75
0.75
0.75
0.75
0.75
0.25
0.5
0.75
0.75
0.75
0.75

0.25
0.25
0.25
0.25
0.5
0.75
0.25
0.25
0.25
0.25
0.25
0.25
0.5
0.5
0.5
0.25
0.5
0.75
0.5
0.5
0.5
0.5
0.5
0.5
0.75
0.75
0.75
0.25
0.5
0.75
0.75
0.75
0.75
0.75
0.75
0.75

0.25
0.5
0.75
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.5
0.75
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.25
0.5
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75

0.917
0.925
0.934
0.917
0.919
0.922
0.917
0.928
0.940
0.917
0.837
0.775
0.864
0.874
0.884
0.864
0.874
0.884
0.855
0.874
0.894
0.940
0.874
0.820
0.859
0.867
0.874
0.832
0.852
0.874
0.820
0.846
0.874
0.966
0.917
0.874

TCUnss TCUr TCUrm TCU P TCUSc TCULF

812
810
809
812
811
811
812
810
808
812
1,297
1,761
1,296
1,296
1,296
1,296
1,296
1,296
1,297
1,296
1,296
808
1,296
1,765
1,770
1,771
1,772
1,766
1,769
1,772
1,765
1,768
1,772
804
1,296
1,772

261
260
258
261
385
509
261
384
507
261
397
531
1,136
1,135
1,134
640
1,135
1,631
642
1,135
1,630
631
1,135
1,636
3,491
3,491
3,491
1,263
2,376
3,491
1,265
2,376
3,491
1,252
2,375
3,491

3,060
3,062
3,065
3,060
3,038
3,016
3,060
2,946
2,833
3,060
2,926
2,799
2,609
2,611
2,613
2,699
2,611
2,523
2,885
2,611
2,337
2,903
2,611
2,327
1,716
1,716
1,716
2,114
1,916
1,716
2,674
2,197
1,716
2,700
2,204
1,716

7,970
7,973
7,976
7,970
7,847
7,724
7,970
7,850
7,729
7,970
7,820
7,679
7,085
7,088
7,091
7,581
7,088
6,594
7,578
7,088
6,597
7,605
7,088
6,579
4,730
4,731
4,732
6,953
5,844
4,732
6,950
5,842
4,732
6,990
5,856
4,732

279
222
164
279
279
279
279
222
164
279
448
609
337
263
188
263
263
262
338
263
187
183
263
339
282
226
170
175
172
170
285
228
170
123
147
170

5,379
3,665
1,951
5,379
5,379
5,378
5,379
3,665
1,950
5,379
10,536
15,692
7,105
4,819
2,534
4,822
4,819
4,817
7,107
4,819
2,531
2,520
4,819
7,117
5,394
3,680
1,966
1,977
1,972
1,966
5,405
3,686
1,966
803
1,385
1,966

TCU
17,761
15,992
14,223
17,761
17,738
17,715
17,761
15,876
13,990
17,761
23,425
29,070
19,569
17,212
14,855
17,302
17,212
17,122
19,846
17,212
14,578
14,650
17,212
19,763
17,382
15,615
13,847
14,248
14,049
13,847
18,344
16,097
13,847
12,672
13,262
13,847

beverage bottles because they can be injection moulded. These materials have high
tensile strength, high elongation at break and high water resistance. Also, since
these plastic materials are biodegradable, and mostly consist of natural substances,
they can degrade in a landfill in an environmentally benign manner within months
(Samarasinghe et al., 2008). By taking this into account, the decay rate will
dramatically increase, and the penalty can be eliminated from the rehabilitation
penalty cost per bottle. Now, the value for Crh is $0.00125/bottle/month which
represents a rehabilitation cost per bottle. This will result in a decrease of TCULF,
hence, decreasing the total system unit time cost (TCU) as seen in Table III.
The use of biodegradable plastic materials has immense benefits because they can
fully degrade in a landfill within months and they are environmentally safe. In turn, this
provides tremendous cost savings because it lowers the landfill disposal cost (TCULF)
which ultimately lowers the total system unit time cost (TCU ), as shown in Table III.

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327

Table II.
Optimal productionrecycling-disposal
policies for different
numerical examples

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328

Therefore, the uses of these types of plastic materials are advantageous when compared
to PET plastic material which takes an enormous amount of time to decay in a landfill
and upon degradation admits dangerous chemicals such as BPA (bisphenol A) into the
environmental water table. Table III illustrates how using biodegradable material reduces
both landfilling and rehabilitation costs. Other social and environmental costs could
also be considered to further emphasize the benefits of using biodegradable material.
For example, emission costs from transportation activities, costs of contaminating water
tables and soil, and additional health costs could all potentially be considered. These
costs, however, are beyond the scope of this paper.

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5. Conclusion
In this paper, a recycling-reuse model that remanufactures non-contaminated PET
plastic bottles and uses regrind from damaged non-contaminated PET bottles mixed
with virgin PET material in the production of new bottles was developed and analysed
in order to reduce the amount of plastic PET bottles that are disposed of in landfills.
The model is assumed to have no shortages and the different percentages regarding the
classes of bottles are taken to be deterministic. In this model, a present value cost is
charged for landfill disposal. This cost included the use of real-estate, cost of land
rehabilitation, and a penalty for contaminating the water and harming wildlife and the
environment. In the analyses conducted on this recycling model, it was found that
the percentage of bottles collected from the market y, had the largest influence on
the outcome of the total system unit time cost (TCU). This is because an increase
in y caused the process unit time costs of bottle collection and sorting (TCUnss),
remanufacturing bottles (TCUr), contaminated bottle sorting (TCUSc), and landfill
disposal of bottles (TCULF) to increase. This supersedes the decreasing process unit
time costs of regrind and virgin material mixing (TCUrm) and the production of new
bottles (TCU p). The use of alternative biodegradable plastics in place of PET was also
examined. It was shown that the use of biodegradable plastic materials made from
natural contents such as CGM or soy protein-starch (SPS) are good candidates as
alternative materials to PET. They degrade in a landfill in a significantly much shorter
period of time and are made from environmentally safe substances that degrade in a
benign manner. This in turn provides cost savings because the process unit time cost
for landfill disposal (TCULF) decreases due to an increase in the decay rate (l) and the
elimination of a penalty from the rehabilitation penalty cost per bottle (Crh). This in
turn decreases the total system unit time cost (TCU ).
5.1 Contributions
The model proposed in this paper makes several contributions to the literature.
The most prominent original contribution of the model is that it charges a present

Table III.
Decay rate comparison
of PET versus CGM
or SPS material

Material

Time

PET
CGM
CGM
CGM
CGM

450 years
5 months
4 months
3 months
2 months

or SPS
or SPS
or SPS
or SPS

Note: When y a b f 0.5

TCULF

TCU

0.000256/month
0.277/month
0.347/month
0.462/month
0.693/month

4,819
391
364
337
310

17,212
12,784
12,757
12,730
12,703

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value cost for land use, land rehabilitation, and a penalty for contamination of the
environment. This cost is unique to this model and underlines the importance of
explicitly considering the costs of material being placed in a landfill. These costs have
not been systematically considered in the existing literature. In the paper, this cost was
arrived at by considering exponential decay and continuous compounding of interest.
Other original contributions include the models ability to accommodate products
that are created from a mix of recycled and virgin material, the potential sale of
contaminated PET plastic bottles to industries that use low-grade plastic materials,
and the possible effects of using biodegradable alternative materials. The existing
models in the literature do not address these considerations. The paper thus contributes
to the inventory management literature through its recognition that all recovered bottles
may not be suitable for recovery, its emphasis on the environmental and social costs of
landfilling items, and underlining the importance of considering the impact of different
materials in plastic bottles.
5.2 Managerial implications
The paper has several important implications for managers of production, reuse,
and recycling systems. At a fundamental level, the paper further underlines the need
for life cycle thinking with respect to the economic, environmental, and social
impacts associated with PET plastic bottles. It highlights the need for improved
coordination between bottle collection, production, and disposal systems. The paper
also provides insight into a number of policy changes that are required to drive more
sustainable development. For example, the model indicates that there is a clear need
to accommodate the use of alternative materials to PET in the production of
beverage bottles. The use of alternative materials has the potential to substantially
reduce the life cycle impacts of beverage bottles. In particular, in cases where
the bottles are disposed, the alternative materials possess the benefits of rapid
degradation and reduced complications associated with BPA. There is also a
need to better account for the true costs of disposing PET bottles in landfills.
Current models do not reflect the costs associated with land use, environmental
contamination, and rehabilitation. Given the large percentage of PET bottles that are
currently disposed of in the landfill, these costs are substantial. Implementing
policies that take into account the true costs of disposal could serve as a further
incentive in the reuse and recycling of beverage bottles. Moreover, the notion of
improved accounting for the true costs of landfill disposal may have implications
for the disposal of other products.
5.3 Limitations and future work
The model is subject to several limitations that provide opportunities for additional
research. The model is explicitly focused on the recycling-reuse of PET plastic bottles
and it does not apply to metal bottles, metal cans, glass bottles, or bottles made of
other plastic materials. To accommodate the recycling-reuse of different types
of bottles, modifications to the model would be required. These modifications, such
as changes to the collection and production systems, exploring the use of alternative
materials in those contexts, or centralised vs decentralized lot sizing decisions, could
be the subject of future research. The model also assumes that all six processes
considered are under the control of a single decision maker. In practice, it is possible
that the bottle manufacture, collection, and disposal will be handled by independent
entities. In such cases, it will be challenging to coordinate decision making so as to

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330

minimize the total system cost. However, the model underlines that a holistic
perspective will lead to the most beneficial outcomes. An additional area of future
research could be the application of the learning curve effect to the model in order to
reduce the different processing costs over time. Maity and Maity (2009) considered
learning effects in their production-recycling model, with an emphasis on the impact
of learning on setup costs and recycling cycles. Incorporating learning effects in the
manual aspects of the plastic bottle recycling system explored in this paper could
provide a basis for extending the model. Further research could also be carried out in
processes of bottle sorting with the aim of reducing cost. For example, sorting carried
out in Process A and Process E could be combined to produce four streams: whole
non-contaminated bottles, damaged non-contaminated bottles, contaminated
bottles to be sold to industries that use low-grade plastic PET material and badly
contaminated bottles to be disposed of in a landfill. Future research could focus on
cost savings from the combination of these two processes. Additional research on the
feasibility of employing alternative materials, such as CGM or SPS, in the production
of bottles on a large scale is also needed. It is important to acknowledge that the costs
of replacing bottles made from PET material with alternative biodegradable
materials could be substantial. Therefore, future research should focus not only on
the production of these bottles on a large scale but also their production at a low cost.
Modifications to the assumptions made in the paper, including varying demand
within a cycle, accommodating varying cycle times, and accommodating shortages
or excess inventory, provide a further basis for additional research. Finally, like other
models in the literature, the model developed in this paper still needs to be put into
practice. Access to empirical data remains the major obstacle in operationalizing
such mathematical models. Unless academicians and practitioners collaborate to
overcome this obstacle, mathematical models will largely function as theoretical
exercises.
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About the authors
Nouri Matar holds a BEng and MASc in Industrial Engineering from the Ryerson University.
He has worked as a Design and Manufacturing Engineer for companies in the USA and Canada.
Mohamad Y. Jaber is a Professor of Industrial Engineering at the Ryerson University.
He obtained his PhD from the University of Nottingham. His research interests include modeling
learning and forgetting processes and their applications, inventory management in supply
chains and reverse logistics, and thermodynamic analysis of production and inventory systems.
He has published more than 100 articles in internationally reputable journals and conference

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proceedings. He is the editor of the book Inventory Management: Non-Classical Views and the
forthcoming one Learning Curves: Theory and Modern Applications, both with CRC Press.
He is an Area Editor for Computers & Industrial Engineering. His industrial experience is in
construction management and he is a member of several professional societies. Professor
Mohamad Y. Jaber is the corresponding author and can be contacted at: mjaber@ryerson.ca
Cory Searcy is an Associate Professor and the Director of the Industrial Engineering Program
at the Ryerson University. He is also an Associate with the International Institute for Sustainable
Development (IISD). His current research focuses on sustainability indicators, sustainability
reporting, and sustainable supply chain management. He has published in a number of
international journals, including the Journal of Cleaner Production, the International Journal of
Production Economics, and the Journal of Business Ethics.

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