This grant provides funding for the development of analytical models for determining the environmental implications of product leasing versus selling. By including environmental variables into what has traditionally been a purely financial decision, our models will evaluate the benefits of product leasing from both economic and social impact considerations. An optimization algorithm incorporating game theory techniques and stochastic dynamic programming will be used and Life Cycle Analysis on selected case studies and scenarios will be performed to quantify the environmental impact. Several industry partners will provide data and products to help validate the models.
If successful, the results of this research will lead to an increase in the understanding of the environmental benefits of product leasing. The current school of thought argues that by maintaining ownership of the product through a leasing arrangement, the manufacturer can successfully put in place a product recovery strategy consisting of reuse, remanufacturing, and recycling. However, preliminary investigation shows that the environmental benefits of leasing are not clear cut, as not all companies that lease their products engage in the same level of take-back and recovery activities. Clearly, a deeper, system-wide, life-cycle understanding of leasing is needed to achieve its full economic and environmental benefits. The primary goal of this work is to develop a set of decision support tools that assist manufacturers, their customers, third-party lessors, and legislators on the true environmental benefits of product leasing versus selling. The proposed work will also directly impact society by pursuing research that aims to reduce the environmental impact of industry while increasing its competitiveness, creating an economic and ecological win-win situation.
