An economic and environmental framework for analyzing globally sourced auto parts packaging system

Available online at www.sciencedirect.com

Journal of Cleaner Production 16 (2008) 1632e1646 www.elsevier.com/locate/jclepro

An economic and environmental framework for analyzing globally sourced auto parts packaging system Jin Lai a, Al Harjati b, Leon McGinnis c, Chen Zhou c,*, Tina Guldberg d a Amazon, World Wide Transportation, Seattle, WA, USA Holcim US, Supply Chain and Logistics Group, Dundee, MI, USA c Steward School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, GA, USA d Sustainable Design and Manufacturing, Georgia Institute of Technology, Atlanta, GA, USA b

Available online 19 March 2008

Abstract Competitive forces are driving US domestic manufacturers to source parts globally, which significantly extends their supply chain and introduces new sustainability concerns. This paper addresses the situation from an operating division manager’s perspective. We present an approach to packaging system assessment which considers the division manager’s span of control, addresses the design of packaging and the corresponding logistics processes, and incorporates both cost and environmental impacts. A construct familiar to operations managers, the value stream map, is adapted to model material flow of both parts and packages, and an integrated material flow analysis is used as the common basis for cost analysis, a modified life cycle environmental impact analysis, and an energy consumption analysis. The framework is illustrated using a case study of a major US automaker. Ó 2008 Elsevier Ltd. All rights reserved. Keywords: International sourcing; Packaging; Energy consumption; Environmental indicators; Material flow; Part-package value stream map; Operation manager’s perspective

1. Introduction Procurement from low-cost countries is growing among US manufacturers. For example, according to the US Census Bureau’s foreign trade statistics [26], automotive parts imports by US companies have increased by 6% per year since 2001. In 2004 alone, the US imported $82.7 billion in automotive parts which represents 4.6% of the total US imports in that year. Changing from a domestic source to an international source typically requires new packaging systems as well as much more complex logistics operations. Both have potentially significant environmental as well as economic impacts. Traditionally, economic effects have been easiest to assess,

* Corresponding author. E-mail addresses: [email protected] (J. Lai), [email protected] (A. Harjati), [email protected] (L. McGinnis), czhou@isye. gatech.edu (C. Zhou), [email protected] (T. Guldberg). 0959-6526/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.jclepro.2008.01.011

and thus have dominated packaging design and logistics decisions. A common packaging solution for internationally sourced parts is to pack them in disposable cardboard boxes on wooden pallets, transport them from the international source to the USA, and stage and/or repack parts into domestic returnable packages (often in a third-party logistics company, or 3PL) before delivering them to the assembly plant. Because of the popularity of returnable packages in domestic flows in high-volume assembly operations, this solution integrates easily into current business practices and manufacturing processes. However, it creates significant waste disposal requirement, adds a costly, nonvalue-added repack process to the parts supply system, and carries potential contamination risk during the repack process. As we shall demonstrate, optimizing packaging for global sourcing can significantly reduce both the environmental footprint and the logistics cost of global sourcing. Environmental concern for parts packaging is not a new issue. The Automotive Industry Action Group (AIAG) issued

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returnable package management, tracking, and testing guidelines in the early 1990s. Over the past 15 years, returnable packages1 have been widely adopted by US automotive companies for their domestic material handling systems to reduce package cost, package waste and transportation damage, and also to support Just-In-Time (JIT) [30]. As mentioned in Ref. [30], it is JIT, along with a reduced number of suppliers and attempts to reduce the geographic distance between supplier and user that stimulated the development of returnable packaging. These practices favor the use of returnable containers because each container will see many ‘‘use cycles,’’ over which its costs can be amortized, and the empty package return transportation costs will be quite modest. In the context of global sourcing where suppliers may be located in a different hemisphere, returnable package assemblies are less attractive. The long transportation route for returning empty packages means much higher return transportation costs, package use cycles that are much longer in duration, and therefore a larger pool of packages spread across a global supply chain, which incurs high cost and may be difficult to control and manage. Thus, a fundamental issue is whether to try to scale up existing packaging systems for global sourcing, or to seek other packaging alternatives. Typically, a specific sourcing decision and its associated logistics are often the responsibilities of an operating division manager who has quantified cost, quality, and delivery responsibilities. In many companies today, environmental or sustainability objectives are not yet quantified to the same extent as operational objectives. Thus, operations managers face a challenge in trying to make decisions that simultaneously meet their cost, quality, and delivery requirements yet also demonstrably move the organization toward greater sustainability. An operations manager has a specific ‘‘span of control’’ which must be considered in any assessment method to support operational decision making. We propose a framework to integrate financial and environmental analyses of alternative packaging and logistics solutions; in the framework, an extended value stream model is proposed to describe the material flow involving packaging; based on the value stream model, an integrated part and packaging material flow analysis is proposed to provide aggregated data to support total cost analysis (TCA), life cycle environmental impact analysis (LCA) and energy consumption analysis (ECA). The remainder of this paper is organized as follows: Section 2 describes current research on sustainable system modeling, environmental and economic assessment, and their integration; Section 3 discusses our proposed framework to integrate TCA, LCA and ECA; Section 4 presents a case on international sourcing, which will be used to illustrate our analysis. Section 5 presents our methodology: the part-package value stream map and its application to the case. Section 6 presents the numerical analysis and results of the case.

1

We will use the terms ‘‘package’’ and ‘‘container’’ interchangeably.

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2. Relevant prior research 2.1. Assessment methods Decision making in environmental management requires the assessment of a complex set of issues. Roome [18] defined sustainable development as, ‘‘A . pathway for change centered on bringing environmental, economic and social considerations to the core of our understanding of social and personal development..’’ Within this context, a large number of tools have been developed to support decision making around environmental strategies and operations; the primary ones include Life Cycle Assessment (LCA), Cumulative Energy Requirement Analysis (CERA), Material Flow Accounting (MFA), Total Cost Accounting Analysis (TCA), and Environmental Risk Assessment (ERA) [31]. Conventional life cycle assessment (LCA) analyzes the comprehensive environmental impacts of all the processes required to fulfill a function from cradle to grave [23]. The environmental impacts include the emissions to and extractions from the environment, as well as other environmental interventions. Research on LCA focuses on the environmental impact indicators and the corresponding calculation, normalization and weighting methods. Among LCA indicator systems, Eco-99 and its older version Eco-95 are widely used for detailed LCA. Eco-99/95 is a weighting method developed under the authority of the Dutch Ministry of Housing, Spatial Planning and Environment (VROM) to evaluate the environmental performance of a product design including damage to material and fossil resources, damage to ecosystem quality and damage to human health [31]. In addition to Eco-99, Nagel proposed a relative normalization method to evaluate suppliers’ environmental performance [13,16], and Thomas and Weinburg proposed a streamlined matrix for LCA [23]. Graedel [8] proposed an ‘‘abridged’’ LCA that employs qualitative ranking of the impacts of stages of the life cycle on various environmental concerns. The most common use of LCA is a ‘‘cradle-to-grave’’ analysis of a product design from a life cycle perspective. However, Millet et al. [14] concluded that ‘‘.in the product design field, the LCA tool should be considered as a specialized tool handled by a specific player (the environmental actor) and should be dedicated to the strategic evaluation of new concepts.’’ Similarly, Thomas et al. [24] state ‘‘These software tools are often complex, opaque in their technical assumptions, and use data that are difficult to verify..’’ There is reason to believe that direct use of LCA tools to support operating decisions may not be practical. Three other analytical methods, cumulative energy requirement analysis, material flow accounting and total cost accounting, are also widely used. Cumulative energy requirement analysis (CERA) assesses the entire demand for energy to produce, use and dispose of an economic good (product or service). Several case studies discussed in Refs. [6,11] illustrate the use of CERA and address the growing concern for energy consumption. Material flow accounting (MFA) analyzes the pathways of material in, out and through a region, business

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sector, company or household. Material flow accounting enables monitoring of total consumption of natural resources, as well as calculation of other indicators [31]. Total cost accounting/analysis (TCA) determines the internal cost or saving resulting from pollution prevention projects and other environmental projects undertaken by a company. The integration of these kinds of assessment tools requires: (1) A comprehensive model for describing the system and identifying the parameters needed by the assessment tools; and (2) a framework to integrate different concepts and tools for decision making. A set of system modeling methods for sustainability assessment are summarized in Refs. [31] by CHAINET, a Concerted Action commissioned by the European Union (EU) Environmental and Climate Program. Most of these models emphasize the environmental characteristics, such as the resources used and wastes emitted, while some important economic factors that determine cost efficiency, such as cost, cycle time, and inventory, are not incorporated explicitly. In addition to specific system models and assessment tools, there are also some frameworks from the literature that integrate sustainability concepts and tools in the context of environmental projects. For instance, there is the hierarchical ‘‘strategy sustainability development’’ decision making model proposed by Robe´rt [17] and improved by Wagge et al. [28] or the environmental decision making framework proposed by CHAINET in Ref. [31]. These frameworks serve as the high-level methodology for strategic environmental decision making. However, although they address the combination of several assessment tools, they do not provide an adequate technical-level framework or common system models that could support detailed evaluation of alternative packaging and logistics solutions for global sourcing. 2.2. Supply chain models Much of the prior LCA-related research on supply chains has focused on product and/or network design, e.g., Seuring [22]. Location may be treated in some aggregate form, e.g., as a random variable to support an ‘‘expected value’’ LCA as in Bare et al. [2]. There is research that proposes guidelines leading to sustainability, e.g., Tsoulfas and Pappis [25], or that focuses on organizational issues, e.g., Maxwell and van der Vorst [12] or Hall [9]. Finally, there is research that proposes high-level frameworks for supply chain analysis, e.g., Sarkis [20], or proposes very specific models, e.g., Hugo and Pistikopoulos [10] where complete characterization is assumed. The prior research has a strategic rather than operational perspective. LCA has been applied to automotive components for a cradle-to-grave assessment supporting product design, e.g., Munoz et al. [15] and Schmidt and Butt [21]. These assessments do not address the details of packaging or logistics. Value stream mapping, used by many US automakers for operation efficiency analysis, models the material and information flow through production or design processes to analyze cycle time, inventory and other operational performance

metrics [5,27,29]. Conventional value stream mapping tools do not address environmental issues directly. In summary, the prior published research on sustainability in supply chains does not appear to address the packaging and logistics problem from an operational perspective. 3. Analysis framework From the perspective of an operating division manager, the typical ‘‘cradle-to-grave’’ perspective of LCA may not be appropriate, because it encompasses concerns well outside the manager’s span of control. The operations manager’s problem is not how to design a product, it is how to deliver a specified product to a specified market, meeting operational requirements while minimizing the incremental impact on the environment. Moreover, an operations manager rarely creates a solution de novo; rather the problem usually is one of improving upon an existing solution. The concerns addressed in the proposed framework are cost and environmental impact. We will use Eco-99 [7] as the basic metric for environmental impact, and use it to assess the environmental ‘‘burden’’ of materials as they enter or leave the operational system boundary. There are other eco-indicators that might be preferred, and the methodology we propose can still be used. Even though energy is incorporated into Eco-99, it is such a major concern of operations managers dealing with global logistics that it merits a separate quantitative analysis or ECA. To summarize, we propose to assess a given sourcing, part, packaging, and logistics alternative in terms of three related factors: cost (in $US), eco-indicator (in mpoints), and energy (in Mjoules). These three analyses share some common drivers: the material flow of parts and packages in processes, storage, transportation, and disposal. We have found that building upon conventional value stream mapping provides an easily understood and effective approach to defining appropriate system boundaries and capturing the associated system structure. Fig. 1 illustrates the structure of the proposed framework. The decision tree box in Fig. 1 represents the process of identifying the packaging option set including packaging material (paper, plastics or metal), production location (domestic or international source), and disposal method of packaging after use (reuse, recycle, return or landfill). In this paper, we focus on defining the system boundary, the extended value stream model and the analysis methods. The operations manager’s problem is quite different from a typical product LCA in two important respects: (1) the operations manager’s span of control does not include the entire product life cycle, and (2) there is an ‘‘as is’’ scenario which the operations manager is attempting to improve, and a ‘‘to be’’ scenario to be evaluated. From the operations manager’s perspective, what is important is the impact resulting from operational decisions, and in particular, the difference between the two scenarios, not the absolute value of the ‘‘to be’’ scenario. Because these scenarios may differ substantially in their structure, system boundary definitions are especially important

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System Boundary Extended Value Stream Model Decision Tree (Option set)

Economic Indicators

Integrated Material Flow Analysis

Total Cost Accounting (TCA)

Environmental Impact Analysis (LCA)

TCA Report

LCA Report

Environmental Indicators

Energy Consumption Analysis (ECA)

ECA Report

Sensitivity Analysis

Fig. 1. Proposed analysis framework.

in establishing comparable alternatives for analysis. The boundaries will provide a means to set and to communicate the scope of analysis clearly. We define the system boundary based on the limit of control in material flows. From the operations manager’s perspective, there are two kinds of material flows. The first includes the packaging materials that flow from or to a generic materials market. For example, kraft paper for dunnage is purchased from a generic kraft paper market and converted to shapes required specifically for a particular parts shipment. Once the shipment is completed, the dunnage is disposed, either by landfill, recycling, or some other method. The generic flow in is kraft paper, the generic flow out is either to a landfill or sale to a recycler. The second kind of flow includes the parts that flow from the supplier to the assembler. The operations manager will see the cost and energy consumption associated in the processes, storage and transportation but not typically the parts flow from or to the generic material market. The returnable packages also share some of these characteristics. In the proposed framework, energy flows are treated implicitly by identifying energy consumption associated with material flow activities. For both conversion and transportation activities, an energy per unit throughput is determined. The system financial boundary identifies the transactions with entities outside the operations manager’s scope of control that impact the operation manager’s financial performance, and include the parts being acquired, the packaging material being purchased, the disposal of material, and deliveries to the assembly plant. Note that this means the system financial boundary is likely to be different from the environmental boundary. We can assess the cost of the kraft paper as it enters and leaves the system defined by financial boundary, and energy and environmental impact as it enters and leaves the environmental boundary. The disposal impact might be negative for all three concerns, e.g., for landfilling since it costs money, consumes energy and increases environmental footprint. It might be positive in the case of recycling, as the recycled kraft

paper displaces consumption of virgin kraft paper. The net impact is what concerns the operations manager. 4. Low cost country sourcing case As an illustrative example, consider a manufacturer of automobile transmissions. Originally, machined castings were obtained from a local domestic supplier and received at the assembly plant in reusable wire baskets, which were accumulated at the transmission assembly plant and returned to suppliers for re-use. There was some dunnage in the wire baskets which was disposed of.2 Parts were owned by the automobile manufacturer once they reached the transmission assembly plant. Fig. 2 summarizes the packaging material flows from material suppliers through the production system. Some returnable containers ‘‘leaked’’ from the system, either lost in process or perhaps appropriated for other uses. Some containers became damaged and no longer usable, and were disposed of. The system boundary for financial analysis associated with the packaging material flow in Fig. 2 is illustrated by the dashed line enclosing transmission assembly. A few years ago, the local domestic supplier was replaced by a supplier in China. The scenario is illustrated in a value stream map in Fig. 3. This was our starting point or base case. In the base case, the machined castings are packaged in plastic bags, the parts in bags are then placed in corrugated cardboard boxes. The cardboard boxes are stacked on wooden pallets, transported to the sea port for consolidation and then loaded into containers for ocean shipping. The containers arrive on the US west coast, are staged, and then transported by train to a station near a repacking center in the upper Midwest. From there, trucks are used to haul the container to a repack center. At the repack center, the parts are removed from plastic bags and repacked into returnable wire basket 2 Any reference to disposal could mean landfill, or if the volume and type of material is appropriate, recycling. While the presentation here refers to landfill, the recycling option can be incorporated into the analysis in a straightforward manner.

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Fig. 2. Package material flows and financial boundary.

containers. The parts in wire baskets are delivered to the assembly line for transmission assembly. After being emptied, the wire baskets are returned to the repack center. An important objective of the repacking is to eliminate contamination from the fibers in the cardboard boxes, were they to enter the assembly plant. The corrugated cardboard and wooden pallets are normally not reused after such a long journey. They either go to landfill or are sold to a recycler. If the corrugated box and wooden pallet material go to a recycler, the system boundary for environmental analysis will be larger than that for the financial analysis. The two boundaries are constructed as the solid gray line and dashed line, respectively, in Fig. 4. The corrugated cardboard recycler and the pallet recycler take the corresponding materials from the 3PL, return them to ‘‘generic’’ state, and inject them back into their corresponding markets. On the other hand, if the pallets cannot be recycled, then the environmental analysis boundary would have to be constructed to include the pallet supplier and the disposal of the pallets, perhaps as fuel or landfill.

After some engineering analysis, two alternative packages were identified: recyclable and returnable. The recyclable alternative is to package the parts into custom-designed, recyclable plastic pallets, containers, and dunnage at the supplier plants. The packaged parts will be delivered to the transmission assembly line without repackaging. The 3PL still will be used, however, to provide an inventory buffer. The plastic components of the packaging system are intended to be ground up, and recycled for use in producing plastic components for automobiles. Fig. 5 illustrates the material flows associated with the recyclable alternative. As in Fig. 4, the solid gray line represents the system boundary for analyzing material and energy flows for the recyclable alternative packaging system and the dashed line the boundary for analyzing the cash flow of the scenario. Note that the regrind operation is inside the environmental analysis boundary because regrind is required to return the plastic packaging to a ‘‘generic’’ form. Thus, the plastic from regrind offsets an existing flow of plastic pellets from the plastics market. It is possible that less than 100% of the plastic packaging is recycled in this manner,

Fig. 3. Base case in conventional value stream map.

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Fig. 4. System boundary with LCC supplier.

which can be accounted for by an appropriate fraction being land filled or recycled in some other manner. Although repack and regrind processes may be done by third-party companies, their input and output are still owned by the automaker. We included these processes in the financial analysis boundary, and their processing cost will be the cost that is paid by the automaker. In performing the economic and environmental analysis of the base case (Fig. 4) and the recycle alternative (Fig. 5), the environmental analysis boundary determines where the material and energy ‘‘costs’’ of packaging will be assessed, and also where the ‘‘benefits’’ of recycling and the costs of other disposal will be assessed. Defining multiple system boundaries simplifies the environmental and economic assessment, but it could be challenged on several fronts. For example, it assumes a single global market for corrugated, pallets, and plastic, when in fact, these markets may be ‘‘local.’’ The environmental impact of producing corrugated may be different for corrugated produced in different countries. There is a limit to the number of pallets that may be recycled economically and enter the domestic pallet market at the 3PL. This is the classic criticism of LCA, namely, the relevance of environmental impacts depends on where they are occurring. At this time, however, the incorporation of environmental analyses, and associated financial analyses,

for packaging and transportation activities in global sourcing represents a significant improvement in information for decision makers concerned about both environmental and economic impacts, despite these limitations. In the returnable alternative, reusable packaging materials will circulate in the supply chain. That is, the parts are packaged in returnable containers at the supplier’s plant. After being emptied at the transmission assembly plant, the empty package assembly will be transported back to the supplier’s plant for reuse. We designed a collapsible container which would reduce the cost of shipping empty containers back to the supplier. Additional reinforcing material was required in this design because it incorporated mechanisms to enable collapsibility. As a result, the returnable container is not recyclable plastic. We assume the life of the returnable container is 5 years, the cycle time in the return cycle is 100 days and there is 10% loss each year. 5. Part-package value stream map and its application Value stream maps, such as Fig. 3, have been used widely in industry to document the flow of a part from supplier to assembly plant in terms of rate, delays, inventory, cost and information flow. They focus on waiting, processing, transportation and logical relationships of the part [13,19,29].

Fig. 5. Alternative packaging system flows.

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The flow in sustainability assessment must also include the explicit input and output material flow in each process, including part, packaging, and waste. Parts and packaging materials merge, separate and dispose at these processes. To facilitate the explicit representation of these relationships, we developed the part-package value stream map. A complicating factor is that there is not a simple proportional relationship between the number of package components and the number of parts shipped. Some packaging component usages are per pallet such as a lid or straps, some are per layer such as slip sheets, some are per case such as corrugated cartons, and some are per part such as protective plastic bags. Furthermore, the analysis sometimes depends on number of package components such as in acquisition, sometimes depends on weight, such as in transportation or recycling and sometimes depends on volume such as maximum number of pallets that can fit into a container. Our approach is to account for both packaging components and parts quantities in terms of unit loads, or package assemblies. The package assembly information for each assembly design can be captured in tabular forms in a data base or spreadsheet. Mathematically, these tables can be represented as vectors and matrices in the subsequent computational models. To simplify the analysis, we restrict our presentation to a single part type. Multiple part types can be analyzed independently if there are no significant interactions. Even for a single part, the assessment requires many definitions and calculations for quantities, weight and volume. To streamline the flow of the presentation, the formal definitions are given in the Appendix. The generic computational model will be explained here. Our notation conventions are

assessment, we need to compute the weight of different types of materials used in each package assembly type. The vector of the weight of B package assemblies WtbB is equal to the product of a matrix identifying the number of components of each type used in each package PkgAssBG and the vector of unit weight of the component types WtgG, or WtbB ¼ PkgAssBG  WtgG In the base case, there are two types of package assemblies, so B ¼ 2. The first is for the international shipping from the supplier’s plant to the repackaging center at 3PL. The second is for domestic handling between the 3PL and the assembly plant. The first package assembly is composed of several package component types, including the internal plastic bags, dunnage for partitioning layers in a box, cardboard boxes and wooden pallet. The second package assembly is composed of the returnable wire basket and plastic slip sheets. In the recyclable alternative as well as returnable alternatives, only one type of package assembly is used from supplier to the assembly line. The dunnage, box, lid and pallets are plastic. In the recycle alternative, the plastic components are recyclable while in the returnable alternative, the collapsible plastic containers are recirculated in the system. For each component type in each assembly type, pkgassb,g specifies the number of component, and wtgg specifies the weight of each component. The product WtbB gives the weight of each package assembly. Similarly, the cost for each package assembly CbB can be computed by replacing the unit weight of each component WtgG with unit cost of each component CgG, or, CbB ¼ PkgAssBG  CgG :

(1) A or a: One or more characters without subscript represent a scalar. (2) AB ¼ ða1 ; .; ab ; .; aB ÞT : vectors are indicated by a character string that begins with an upper case letter and that has a single upper case exponent. The string, which may be a single character, is the vector’s name, A in this example. The exponent is its length, B in this example. An element in the vector is represented by its corresponding character or string in lower case, the position in the vector is indicated by a lower case character of the exponent. (3) CdEfGH: A matrix is indicated by a string that has a twocharacter exponent and that starts with an upper case character. The first character of the exponent represents the total number of rows in the matrix and the second the number of the columns. The elements in the matrix are represented by lower case strings. The position of the element in the matrix is indicated by the lower case of the exponents. For example, PkgMtlBR, is a matrix named PkgMtl that has B rows and R columns. The element of the matrix in row b, column r is referred to as pkgmtlb,r.

5.1. Packaging assembly modeling For logistics analysis, we need to compute the weight, volume and cost of each package assembly type. For life cycle

Each type of material used in a package assembly has specific life cycle properties. Some components may be returnable while others recyclable. Therefore, we need to find the weight of different types of materials in each assembly type PkgAssMtlBR. This is a matrix computed as the product of PkgAssBG and a matrix specifying the weight of each type of material used in each component type PkgMtlGR. PkgAssMtlBG ¼ PkgAssBG  PkgMtlGR In the base case, PkgAssBG specifies that the package assembly uses one wooden pallet, several cartons and dozens of plastic inner bags for the international package. PkgMtlGR specifies the weight of various materials in each component type, including the inner bag, cardboard for dunnage and box, wood for pallets, etc. In the recyclable alternative, different types of recyclable plastics are used for different components. 5.2. Process modeling The processes to be modeled can include parts packaging, repacking, material transformation, packaging component recycling, parts or package assembly storage, and packaging disposal. The logistics processes of transporting, merging and separating make it difficult to trace material flows in the unit

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of package assemblies through the system. To facilitate, we first define the concept of stream. A stream is a flow of some materials of interest through one or more processes. The stream might be a flow of packaging assemblies from a packaging supplier to part supplier, a flow of packaged parts from supplier to final assembly, or a flow of packaging material through recycling process. The unit of a stream is defined as follows: if it is a flow of empty package assemblies, one unit of the stream is one unit of the package assembly; if it is a flow of loaded package assemblies, one unit is one package assembly plus the number of parts it holds; if it is a flow of parts, one unit is one part; and if it is a flow of packaging material, one unit is the amount of materials required by one unit of the package assembly to which these materials correspond. According to the definition, the total unit weight of stream s, denoted wtss can be calculated as wtss ¼

B X 

strmpkgs;b  wtbb þ sps  strmpkgs;b  ulb  wt



b¼1

For each packaging assembly type b, there are two components. The first is the weight of the package assembly. This is the product of assemblies included in the stream strmpkgs,b and its weight wtbb. The second is the weight of parts in the package assembly for those streams with or without parts, indicated by sps. In our study, most material flow included parts. However, there are no parts in the wire basket return flow from the plant to the 3PL in the base case and the return of the empty packaging materials in the returnable alternative. The weight of the parts is equal to the product of the number of parts in a package assembly ulb and the weight of each part wt. The unit stream weight sums up the above two terms over different package types in B.

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is the wire basket used in the domestic portion in the base case. Each element in the vector is the cost in a particular transportation arc.  1 CnE ¼ diagðTspShCntEX  ShCntUlXB  UlB Þ CXE The notation diag(V) denotes a function that transforms vector V into a diagonal matrix whose ith diagonal entry is vector V’s ith entry. The term TspShCntEx indicates which shipping container is used in which transportation arc. For example, in the base case and both alternatives, standard ISO 400 containers are used. ShCntUlXB is the maximum number of package assemblies of type b that can fit into shipping container type x when the package assemblies are not collapsed. A standard ISO sea container can hold 40 unit loads, or package assemblies, in the base case and both alternatives. The product of the first two matrices determines which arc carries how many of which package. UlB is the maximum number of parts that can be contained in a package assembly. Even when the pallets are of the same size, the maximum number of parts that can be contained can vary. For example, both alternative packaging designs in the international shipping can hold 25% more parts than in the base case due to customized design. TspShCntEX  ShCntUlXB  UlB is the number of parts moved by one unit of the shipping container on each transportation arc. CXE is the cost per shipping container. The equation computes the per part transportation cost in each transportation arc, such as from factory to sea port, from sea port to sea port and from 3PL to assembly plant. Similarly, we can find the vector of cost if returnable package assemblies moved are collapsed, as in the second alternative.  CcE ¼ diagðTspShCntEX ShCntULClpsXB  ShCntUXB 1  UlB Þ CXE

5.3. Logistics process modeling In global logistics, transportation and inventory are much larger contributors to total cost, energy and environmental impact than in the domestic counterpart. The international transportation involves multiple modes, such as sea cargo, rail, truck and air. Each mode uses different types of containers. In the sea cargo and rail modes, standard ISO sea containers are normally used, although there are 200 and 400 versions. Truck transport may use a variety of trailers and trucks having different dimensions and capacities. The international transportation is also more complex because returnable packaging materials can be collapsed in return routes. Even the package assembly capacity in international and domestic portion may be different. For example, the package assembly in the domestic portion in the base case contains 40% more parts than its international counterpart. We define a transportation service associated with a particular origin, destination, shipping container and transportation mode. First, we find the vector of cost per unit shipping container with or without parts in each transportation arc when the package assembly is NOT collapsed, CnE. An example of this

5.4. Part-package value stream map Graphically, we depict the flow of materials in streams for sustainability assessment in the form of a part-package value stream map which shows the logical flow of part and package streams associated with locations and processes from acquisition to final assembly. A small example is shown in Fig. 6. Each process is represented by a box labeled with process name and location. Each process has input streams and output streams, represented by arrows. Each arrow is labeled with stream ID and the material relationship. At each process, there may be originating or output streams and terminating or input streams, and a conversion relationship. The financial analysis boundary is drawn with dashed lines and environmental analysis boundary is drawn with a dotted line. The part-package value stream map, together with the notation for package, package assembly, stream, and transportation service, provides a means for describing complex part and packaging flows in a way that supports integrated economic, energy, and LCA analysis.

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Stream_ID = Stream_ID =

Process name

Process name Location

Stream_ID =

Location

Stream_ID =

Stream_ID = Boundary for economic analysis Boundary for environmental analysis

whether or not it is returnable. For non-returnable package components, indicated by rtngg ¼ 0, the annual requirement of package component qg is the sum of components in all package assemblies. Both the international portion of the base case and recycle alternative use non-returnable packages. For each assembly type, the number of assemblies required in a year is the ratio of annual demand q and number of parts in an assembly ulb, or,

Fig. 6. Definitions of a part-package value stream map.

qg ¼ The part-package value stream map corresponding to the value stream map of the base case in Fig. 3 is shown in Fig. 7. The part-package value stream map is quite different from the conventional value stream map because it must explicitly display the flows of each relevant material in order to be useful in assessing the total energy and environmental impact. First, the empty packaging assemblies, B1, including plastic bags, cardboard boxes and wooden pallets, are produced in Location1. The package assemblies are moved to Location2, the part manufacturer, where the parts, represented by stream 8, or S8 ¼ GearAs, are loaded into B1. These are transported to Location3, the international source sea port. The above processes are lumped together as A in the conventional value stream map shown in Fig. 3. From there, the packaged parts in sea containers are transported to the 3PL or repack center at Location4, indicated as B in the conventional value stream map shown in Fig. 3. At the repack center, the components in package B1 are transferred to domestic wire basket containers B2. Wire baskets contain 2% new ones injected into the system per year because of damages and losses, and 98% returned ones. These are designated as streams 5 and 6, respectively. Stream 7 designates materials of 2% of B2 going into generic market and returning for remake. S2 ¼ B1 designates the cardboard boxes and wooden pallets recycled at location5. The repackaged parts are transported to unpack before assembly at location6. Fig. 7 also shows the boundaries specified for the economic and environmental analyses. The arrows crossing the economic analysis boundary represent transactions which directly impact the operations manager’s financial performance because they represent direct costs or revenues from recycling. The arrows crossing the environmental analysis boundary represent material flows that impact the environment. The two boundaries are different but related. For example, should the operations manager find a way to reduce the packaging required (location8) there would be a reduction in both the materials flowing from the environment (S7) and the cost associated with package flow S5. 5.5. Annual package component acquisition and circulation Let QG be the vector of number of package components for each type in a year. The calculation of annual rate depends on

B X q pkgassb;g if rtngg ¼ 0 ulb b¼1

ð1Þ

The multiplication of the ratio q=ðulb Þ with the number of components of type g in package type b, or pkgassb,g, gives the annual requirements for number of package components for each component type. The summation accounts for the components among all assembly types. In the base case, there are two types: international and domestic. In each alternative case, there is only one type. For returnable components or packages, such as in the return alternative, there is both a one-time acquisition and an annual acquisition due to damage or loss. The annual acquisition will be specified as a fraction of total packages in the system and the one-time acquisition can be approximated by the total packaging assemblies in the system. The total packages required in the system depends on annual volume q as well as circulation cycle time. One way to calculate the vector of number of each package component type in circulation is to find the sum of those waiting to be processed, being processed and being transported, including both forward and return, as shown in the first, second and third term below. 

T 1 InvKB  PkgAssBG eK 365 

1 K KS S diagðTk ÞInput  diagðRts Þ  StrmPkgSB þq 365  T 1 BG K diagðTeE ÞInputES PkgAss e þq 365

T SB BG S diagðRts Þ  StrmPkg  PkgAss eE

bG ¼ q Q

where eK ; eE are the all-1 vectors of size K and E, respectively. The first term is for those components waiting at processes or at consolidation locations for transportation. The product in the parenthesis is a matrix of the duration of the components waiting at each process or staging area. Examples of waiting time at the process include the wait at the 3PL in the base case and wait for regrind in the recyclable alternative. An example of waiting time for transportation can be the wait for consolidation at west coast port. If the average waiting time is 10 days, it will be 10/365 year. In the second term, the resulting vector in brackets represents the durations of streams for parts or packages being processed. For example, in the base case, the repack takes 1 day or 1/365 year. That applies to both the part stream and the packaging material

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1641

Fig. 7. A simplified part-package value stream map for the base case.

streams. The quantity in the curly brackets is a matrix with dimensions KG, providing the duration of stay for each package component type at each process. The entire second term is then the total duration for each component type at all processes. The last term is similar to the second but for the durations in the transportation arcs, such as on a ship from China to the west coast, or on train from west coast to the station near 3PL in Michigan, or the return of collapsed empty containers to China. The annual acquisition for returnable components qg is the product of amount of component in circulation b qg and annual loss ratio lsg, or, qg ¼ b qg  lsg if rtnbb ¼ 1:

ð2Þ

5.6. Process modeling based on streams In calculating energy, environmental impact and cost, we need the amount of each material flowing through each process, such as regrinding or pelletizing processes in the recycle case. Let ProcMtlKR be the matrix defining the amount of materials handled in the processes in K, ProcMtlKR ¼ InputKS  StrmPkgSB  PkgMtlBR : We will use the materials and streams related to repack in the base case to explain this equation. InputKS indicates the input streams to processes in K. The input streams include S3, S5 (which is 2% of S2) and S6 (which is 98% of S2). StrmPkgSB indicates which assembly packages are in streams in S. The assembly packages entering repack process include both the recyclable international packages and returnable domestic packages. The package materials in the international package include wood for pallets, corrugated cardboard for

the boxes and plastics for the inner bags. PkgMtlBR is the amount of package materials of types in R. The package materials in the domestic portion include steel in the wire basket and plastic in the slip sheets. Let OER be the total amount of all types of packaging materials at all processes leaving the environmental analysis system boundary, for example, the corrugated and the ‘‘leak’’ in the return alternative. It can be computed as: OER ¼ OESS  StrmPkgSB  PkgMtlBR : The parameter OESS is a binary vector to indicate if a stream leaves the environmental analysis boundary. In the base case, the streams leaving the environmental boundary include S1 and S7. S1 includes the wood for pallets, corrugated cardboard for boxes and plastic for inner bags. These will go to package material recycle market. S7 is the damaged and lost wire baskets and the plastic slip sheets, which are 2% of S2. We assume those will go to the materials market. The energy consumption analysis for transportation is based on weightedistance in transportation. Let QM be the vector of total weightedistance of each transportation mode of the streams studied.       QM ¼ TspMdEM diag DstE TspStrmES  diag RtsS   WtsS where TspMdEM indicates which transportation mode is used in which arc, for example, in the base case, the arc from China to the US west coast is on container ships and from the west coast to the station near 3PL is on rail. A mode can include multiple arcs. For example, the trucking mode can be used in domestic transport in China as well as drayage from train station to 3PL. DstE defines the distances in each arc, and

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1642

TspStrmES indicates which stream moves in which arc. RtsS is the annual rate of each stream and WtsS is a vector for unit weight for the streams. The quantity in the square brackets is the annual weight moved in each transportation arc. The quantity in the curly brackets is the weightedistance in each transportation arc and finally, the total expression provides the total weightedistance in each mode, including multiple arcs.

manager would have no control or visibility of the cost. It is therefore excluded from financial analysis and indicated in the part-package value stream map. The two terms in the brackets are for the transportation costs of non-collapsed and collapsed packaging materials in the transportation arcs, respectively. The use of eE allows the combination of collapsible or non-collapsible containers into a single expression and ease of implementation.

6. Cost analysis 6.3. Inventory cost We consider four categories of cost: package acquisition, transportation, inventory, and material handling from the supplier to the final assembly. 6.1. Package acquisition cost For the one-time use package components, the annual consumption is equal to the product of the number of packaging assemblies required and the total amount of materials for each assembly, or qg  cgg, where CgG is the acquisition cost for each package component. This applies to the international portion in the base case and most components in the recycle alternative. For returnables, in addition to the annual acquisition due to annual loss shown in Eq. (2), we need to add the initial acquisition cost amortized over the life of the package. This applies in the returnable case and the wire basket in the domestic part in the base case. Let lfg be the useful life of component g. We can define some amortization function l(LfG), which incorporates both depreciation and time value of money over component g’s life of lfg. The package acquisition cost per part is 

 G T

h

T



b G diag Rtng CPA ¼ Q CgG þ Q 

   diag l Lf G CgG

i G

The first term accounts for the total cost of the non-returnable components; QG is the annual required quantity of material for each component type and CgG is the cost of each component type. The second term accounts for the total cost of the returnable components; the quantity in the brackets is the number required for each component type for the returnable components. The quantity in the curly bracket is the percentage due to amortization for the returnable packages.

Inventory cost is the cost associated with inventories of parts and returnable packages. If the discount rate for carrying inventory per unit time is h, then the total annual inventory cost can be computed as:  T b G CgG CI ¼ hqc þ h Q The first term hqc is the inventory cost for the parts. In comparing alternatives, this term should be considered if different package assembly designs lead to different logistics processes and different numbers of parts in the pipeline. In our study, among base case and two alternatives, the number of parts in the pipeline is similar. The second term is for reb G ÞT is the vector of the turnable packaging components. ðQ quantity of components within the financial boundary. The b G ÞT CgG is the sum of value of all packaging comproduct ðQ ponents within the financial boundary. The returnable alternative incurs more inventory carrying cost due to the extra inventory of the packages in the system. 6.4. Processing cost The total processing costs within the financial analysis boundary is the sum of cost per unit times the annual demand for all the costs included in the financial analysis boundary, or T  CP ¼ FBK CkK  q: In the base case, the major processing is the repackaging at 3PL. The repackaging is eliminated in both alternatives. In the recycle alternative, the major processes are the regrind and palletizing. These do not exist in the base case and returnable alternative. In the returnable alternative, there is no major processing cost within our financial boundaries but the transportation cost is much higher.

6.2. Transportation cost 6.5. Package assembly end of use value The total transportation cost per part CT is equal to the sum of transportation cost per unit in arcs CeE for those within the financial boundary FBE, or, T        CT ¼ FBE diag eE  ClpsE CnE þ diag ClpsE CcE FBE is a vector with binary entries to indicate if a transportation arc is in the financial boundary or not. For example, the transportation from Location1 to Location2 in the base case takes place in China and before the acquisition. The operations

The value of the streams that leave the financial analysis system boundary is the product of stream quantity leaving the financial analysis boundary and the associated salvage value or cost, or  T vp ¼ OFS CFS : For the base case, we assume that the corrugated and wooden pallets go to a recycler at prevailing market value.

J. Lai et al. / Journal of Cleaner Production 16 (2008) 1632e1646

For the recycle alternative, we assume the end of life value by the prevailing market price for material. For the returnable alternative, the retired packages will have no end of use value but cost associated with the disposal. The total annual cost is the sum of the five cost components above: CTotal ¼ CPA þ CT þ CI þ CP  vp The relative costs of the recycle and returnable alternatives compared with the baseline based on the above analysis are summarized in Table 1. For the recycle alternative, the cost of the packaging assemblies is 16% higher than the base case, primarily because plastic costs more than cardboard or wood. The inventory cost in the base case and the recycle alternative are approximately the same. The transportation cost is 16% lower, mostly due to the higher density packing in the specially designed package. In the recycle alternative, there is no longer a need for repackaging at the 3PL which leads to major savings of 45%. The only 3PL service required is staging and consolidation. The reclaimed value, or cost reduction, in recycle alternative is 105 times higher than that in the baseline. The overall cost savings is 24%. For the returnable alternative, the collapsible and returnable packages are to be bought in the low cost country from stock, and there is significant packaging cost savings due to the extended life of the packages. However, the transportation cost is higher due to the return trip from assembly plant in upper Midwest to the manufacturer and associated extra packaging material inventories. The material in returnable alternative is not recyclable. Therefore, there is 100% increase in relative cost versus the base case. The total cost savings is 21% as compared to the baseline. This may be optimistic because the returnable package process management cost is not explicitly considered. 7. Life cycle analysis and energy consumption analysis We adopt Eco-indicator 99 discussed in Ref. [7] to evaluate the comprehensive environmental impact of packaging and transportation. In our analysis, the total system’s Eco-score Env is the summation of the Eco-score of the input package materials, the processes, the transportation services and the output packaging materials in the system boundary for environmental impact analysis. Table 1 Relative cost comparisons

Packaging Transportation 3PL services Recycle Total

1643

  T Env ¼ QG  PkgMtlGR  EnvrR eG þ sum ProcMtlKR   T T   EnvKR þ EnvmM QM  OER EnvrR ; where  is an operation between two matrices, ½ai;j   ½bi;j  ¼ ½ai;j  bi;j  and sum () returns the summation of all entries of the matrix. EnvrR is a vector for the environmental score for each material type. The first term calculates the eco-score for producing the package materials that enter the environmental analysis boundary. EnvKR is a matrix of environmental impact scores to process one unit of weight of material R in process K. The second term is for the environmental score of all processes in the environmental boundary. EnvmM is a vector of environmental impact score per ton-mile in the transportation modes. The third term is then the total environmental score in the transportation, including the return routes. The fourth term is similar to the first term and calculates the eco-score for materials going out of the environmental analysis system boundary. The higher the total eco-score is, the worse the environmental impact. In the case study, the LCA analysis is summarized in Table 2. For the recycle alternative, the packaging component of the eco-indicator is 17.1% larger than the base case, and there is a very small difference (<0.04%) in the transportation component. The recycling of cardboard boxes and wooden pallets in the baseline reduces the contribution to the eco-indicator and was a negative value. The recycle alternative has a much greater reduction in the eco-indicator due to recycling than does the baseline, by a factor of 30. While dramatic, it should be noted that the recycle component of the score is significantly smaller in magnitude than the packaging and transportation components (this is true across all three cases). Overall, there is a 7.7% reduction in the eco-indicator for the recycle alternative relative to the base case. The returnable alternative has a 56.9% decrease in the packaging component of the score due to its reuse but 16.4% increase in transportation due to its weight and lower density packing. The reusable containers are not recyclable, and due to the ‘‘leakage’’ of packages that must be replaced every year, the contribution to total eco-indicator is an increase in the recycling component, rather than a savings. Overall, the reusable alternative shows a 4.4% overall increase in eco-indicator relative to the base case. Similarly, the total energy consumption in the system will be:   T Eng ¼ QG  PkgMtlGR  EngrR eG þ sum ProcMtlKR    T T  EngKR þ EngmM QM  OER EngrR :

Recycle (%)

Returnable (%)

Table 2 Relative life cycle analysis comparisons

16 16 45 104 88

66 39 45 100

Packaging Transportation Recycle

L24

L21

Total

Recycle (%)

Returnable (%)

17.1 0.0 3012.5

56.9 16.4 127.1

L7.7

4.4

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1644 Table 3 Relative energy consumption comparisons

Packaging Transportation Recycle Total

Recycle (%)

Returnable (%)

204.9 0.4 381.6

12.1 13.5 100.0

L6.0

35.9

The terms are similar to those in the environmental impact except that we substitute the environmental scores with energy consumptions in Mjoules. In our analysis, we used EngrR values from the Danish Environmental Protection Agency [3]. It is interesting to note that the data from US DOE Transportation Energy Data Book, Ed 21 is quite different. The energy consumptions comparisons are given in Table 3. Relative to the base case, recycled packaging requires significantly more energy for production, leads to a small relative saving in transportation, and a large relative savings in recycling. The recycling saving can be attributed to the fact that there is a higher energy salvage value associated with recycling plastic than with recycling cardboard and wood. The net effect is a 6% reduction in energy consumption relative to the base case. The returnable option leads to a significant increase in total energy consumption; the largest component of the increase is recycling, because the returnable packages are not recycled, and so no energy salvage value is realized.

8. Summary and conclusion Based in part on the analysis presented, the decision taken was to select the recycled package option, an option that, at the outset, wasn’t really thought to be viable. The systematic integrated treatment of costs, energy, and environmental impact provided the quantitative analysis of trade-offs, revealing the recycle option to be superior on all three measures. From our presentation of them, it should be clear that the models were quite intricate, and that developing them was a painstaking process. However, once the models were in place, it was a relatively simple matter to repeat the analysis for other parts. There are four key lessons from this study: 1. The integrated application of LCA, energy and cost analysis to an operations group of a larger enterprise requires careful specification of the boundaries for the analysis, and careful attention to the standard data to be used. The specific boundaries for the three kinds of analyses may differ. 2. Despite the recycle options being superior for cost, energy, and environmental impact, it is unlikely for a single alternative to dominate on all three measures. Quantifying the trade-offs allows decision makers to consider options that

are more costly but provide significant benefits in energy or environmental impact and decide whether or not the costs of the benefits are acceptable. 3. Integrating cost, energy and environmental impacts across a network of manufacturing and logistics operations is very complicated, despite the fact that each of the three issues by itself has a relatively straightforward model. Interactions among them create the complexity. 4. Standard data to populate these models remain a major challenge, especially with regard to LCA. Different data sources can vary dramatically in their standard values, so considerable care is required, not just in developing such models, but in developing the parameter values to be used in them. Global sourcing of manufactured parts raises important and complex questions about logistics costs and environmental sustainability. Packaging system design has a major impact on both, but the impact is not easy to assess because of the complex coupling between package design, logistics costs, and environmental impact. Although many assessment tools, system models and decision making frameworks have been studied in the literature, we found no common system modeling method or framework to integrate life cycle analysis (LCA), total cost analysis (TCA) and energy consumption analysis (ECA) with package system design for parts globally sourced. In this paper, we have presented a framework and a formal process model suitable for use by an operations manager. The specific contributions are (1) a part-package value stream map, extended from conventional value stream maps, that can describe the scenario and capture necessary parameters to support LCA, TCA and ECA; (2) a framework to integrated Material Flow Analysis and to support TCA, LCA and ECA to insure consistency of data and assumptions; and (3) a case study for a major US automaker to illustrate the proposed approach. There are a number of directions for future work. First, extending our approach to accommodate multiple parts and multiple packaging systems is important, because there are many shared processes, such as transportation, package system production, or recycling. Another key opportunity is to incorporate risk analysis in TCA, LCA and ECA, because global sourcing brings more uncertainty to the financial, environmental and energy impact. Finally, we recognize the limitation of the ‘‘globally homogeneous market’’ assumption; relaxing this assumption will require a careful articulation of principles as well as the development of appropriate models for supporting decisions. Acknowledgement The patient and careful work of the referees and editor has significantly improved the presentation of the integrated models, and we gratefully acknowledge their contribution.

J. Lai et al. / Journal of Cleaner Production 16 (2008) 1632e1646

Appendix. Notation

Symbol

Definition

B c CbB

The number of packaging assembly types to be considered Unit acquisition cost of a part A vector of unit acquisition cost of each assembly type among B types A vector of package cost per part in transportation arcs when collapsed A vector of cost per part in transportation arcs Unit reclaimed value of stream s in S A vector of unit acquisition costs for each package component type Total inventory cost per part A vector of processing costs per part within the financial analysis boundary An indicator vector identifying the collapsed package streams A vector of package cost per part in transportation arcs when not collapsed The total processing cost per part within the financial analysis boundary The total processing cost per part within the financial analysis boundary Total transportation cost per part Cost per occurrence per shipping container for the transportation arcs Distance of each transportation arc The number of transportation arcs in the model Total system energy consumption A matrix of the energy required to process one unit of material in a process Energy consumption per weightedistance for each transportation mode A vector of energy requirement to produce one unit weight of the materials Total systems environmental score A matrix of environmental scores to process one unit of material in a process A vector of environmental impact score per weighte distance, for each transportation modes in M A vector for the environmental impact scores for each material type A binary vector indicating if a transportation arc is in the financial boundary A binary vector indicating if a process is included in the financial boundary The number of package component types to be considered Inventory cost per unit per unit time A matrix indicating if a transportation arc is an input stream in s An indicator matrix to indicate if a stream is an input to a process The matrix describing the inventory (in days) of package assemblies waiting at processes either for processing or for transport The vector of the average days of part inventory at each process, excluding the transit inventory A matrix indicating the input and output streams of the processes in K The number of processes to be considered The number of locations involved in the analysis A vector of useful life in years for the returnable package component

CcE CeE CFS CgG CI CkK ClpsE CnE cp cPA Ct CXE E

Dst E Eng EngKR EngmM EngrR Env EnvKR EnvmM EnvrR FBE FBK G h InputES InputKS InvKB

InvPK IOKS K L LfG

1645

Appendix (continued ) Symbol

Definition

LsG

A vector of returnable packaging components’ annual loss ratio The number of transportation modes A matrix describing the origin and destination of the transportation arcs The total amount of all types of packaging materials at all processes leaving the environmental analysis boundary A binary indicator for the streams leaving the environmental boundary A binary indicator for the streams leaving the financial boundary A binary indicator for whether a transportation arc is in the financial boundary A binary indicator for a process included in the financial analysis boundary A matrix for number of package components used in assembly type A matrix of the amount of materials used by a package assembly A matrix of the weight of different materials and packaging assembly type A matrix of the weight of different materials used in each component A matrix for the weight of material type r used in process k A binary indicator matrix to indicate if a process k is at a location l A matrix of environmental scores to process one unit of material in processes Annual demand rate for the part The annual requirement of a package component The vector of annual consumption for each package component type The vector of amount of component in circulation for each package A vector for the total weightedistance of each transportation model The number of packaging material types A binary indicator if a package assembly b is returnable A binary vector indicating returnability The annual rate (in units) of each stream The number of streams to be analyzed A matrix of maximum number of collapsed package assemblies in a shipping container A matrix similar to the one above for uncollapsed package assemblies A binary indicator to indicate whether a stream includes a part, or it is purely packaging A matrix to indicate if a stream is included in a package assembly Travel time in days in each transportation arc The vectors of cycle times in days for each process An indicator matrix defining which transportation mode(s) is used each arc A matrix indicating which shipping container is in which transportation arc An matrix indicating which stream(s) are moved in each transportation arc The vector of maximum part capacity for each package assembly type The value of reclaimed value per part Unit weight of one part The vector of unit weight of each assembly A vector of unit weight for each package component type A vector for unit weight of each stream The number of shipping container types

M ODEL OER OESS OFS PBE PBK PkgAssBG PkgAssMtlBR PkgMtlBR PkgMtlGR PkgMtlKR ProcLocKL ProcMtlKR q qg QG bG Q QM R RntbB RtngG RtsS S SchCntUlClpsxB SchCntUlxB SpS StrmPkgSB TeE TkK TspMdEM TspSpCntEx TspStmES UlB vp wt WtbB WtgG WtsS X

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