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An Approach to Integrating Environmental Considerations within Managerial Decision-Making

27 Pages Posted: 1 Aug 2007 Last revised: 29 Oct 2015

Ravi Subramanian

Georgia Institute of Technology - Scheller College of Business

F. Brian Talbot

University of Michigan - Stephen M. Ross School of Business

Sudheer Gupta

Simon Fraser University

Date Written: November 1, 2008

Abstract

We argue that three environmental trends have created a need for new tools to help managerial decision-making: [i.] an expansion of existing command and control directives; [ii.] the introduction of market-based policy instruments; and [iii.] the adoption of Extended Producer Responsibility. To address this need, we develop a non-linear mathematical programming model from a profit-maximizing firm's perspective, which can be tailored as a decision-support tool for firms facing environmental goals and constraints. We typify our approach using the specific context of diesel engine manufacturing and remanufacturing. Our model constructs are based on detailed interviews with top managers from two leading competitors in the medium and heavy-duty diesel engine industry. The approach allows the incorporation of traditional operations planning considerations - specifically capacity, production, and inventory, together with environmental considerations that range from product design, through production, to product end-of-life. A current hurdle to implementing such a model is the availability of input data. We therefore highlight the need to not only involve all departments within businesses, but also for industrial ecologists and business managers to work together in order to be able to implement meaningful decision models based on accurate and timely data and with the
potential to have positive economic and environmental impact.

Keywords: Environment, Operations Planning, Legislation, Integrated Product Policy, Non-Linear Optimization

Suggested Citation

Subramanian, Ravi and Talbot, F. Brian and Gupta, Sudheer, An Approach to Integrating Environmental Considerations within Managerial Decision-Making (November 1, 2008). Available at SSRN: https://ssrn.com/abstract=1004339 or http://dx.doi.org/10.2139/ssrn.1004339

Ravi Subramanian (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

F. Brian Talbot

University of Michigan - Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Sudheer Gupta

Simon Fraser University ( email )

Burnaby, British Columbia V5A 1S6
Canada

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