ABSTRACT
Sustainable products are receiving significant attention worldwide from customers, industries, and governments. Companies that can efficiently respond with more sustainable products may recover more long-term value from their operations. Flexibility measures response value in an environment of price uncertainty. We consider a company that has the flexibility of producing both ordinary and more sustainable “green” products, and is striving to improve its overall quality. We present a model to evaluate the optimal strategies that will maximize the expected profit using real options analysis. We illustrate the use and sensitivity of the model for desktop computer production. Our approach gives decision makers a way to choose the appropriate
12.1 Sustainable Production in Flexible Systems ................................................. 170 12.2 Sustainable Product Quality Management Issues in Design and
Manufacturing in the Electronics Industry................................................... 171 12.3 Real Options for the Flexible Supply Chain ................................................. 172 12.4 Formulation of a Model to Evaluate the Value of Flexibility to Produce
Ordinary, Green, or Both Product Designs .................................................. 173 12.5 Real Options Analysis of Ordinary and Green Desktop Product
Designs ......................................................................................................... 177 12.6 Summary ...................................................................................................... 182 Acknowledgments .................................................................................................. 182 References .............................................................................................................. 182
strategies to maximize the expected profit when there is flexibility of producing ordinary and green products under price uncertainty and switching costs between strategies. We discuss future sustainable product quality attributes and their product life cycle management implications for the electronics industry.
