Copulas for Demand Estimation for Portfolio Reuse Design Decisions

Design for multiple product lifecycles with component reuse potentially improves profitability, customer satisfaction and environmental impact. However, deciding on the scope and the level of detail (granularity) to be considered in the design process can be challenging. Although a comprehensive model that takes into account all important issues would be immensely useful, modeling difficulties and computational intractability prevent their successful implementation. This paper extends the scope of a previously developed design decision tool for determining optimal end-of-lifecycle decisions. The single product case is extended to a product portfolio, which has been shown to capture more demand. Demand is explicitly considered and its modeling is accomplished with the use of copulas. An important result from statistics, Sklar’s theorem, provides a way to use data from existing product sales to estimate demand for currently nonexistent reused products. In addition, effective age calculations are updated. On the computational front, time-continuation and seeding is used for NSGA-II to converge to optima more quickly in the resulting larger problem. A personal computer case study illustrates the effect of different parameters such as portfolio size, the possibility of recycle, and limits on environmental impact (as opposed to mandated take-back).