Abstract
The system dynamics (SD) modeling approach is used to study the U.S., Japan and EU auto industries’ closed loop supply chains. The objectives of this study are to examine the impact on these three supply chains of: government regulations; financial incentives for recycling, remanufacturing, and salvage; the export of used cars; market pricing for remanufactured, salvage and recycle materials on cash flows; and use of such materials for car manufacturers and routine car maintenance and repair considering similarities and differences.
Disposal of cars that have reached end of life phase in the U.S., Japan and EU, as well as, the export of used cars by Japan to emerging economies are examined. Base scenario analysis using car consumption data and forecasts are explored. The SD model was also subjected to boundary conditions tests for structural validity. Dynamic analyses of different market scenarios for the U.S., Japan and EU auto industries’ value chains are also conducted. The study shows the impact of government regulations, financial incentives and market pricing for remanufactured, salvage and recycle materials have a positive, but differing impact on cash flows and use of such raw materials for car manufacturers in these three market segments.