Could this advanced two‑warehouse closed‑loop model unlock new ESG value for electronics supply chains?

The research presents a mathematically rigorous framework for a two‑warehouse inventory system that integrates remanufacturing, trade‑credit policies, and carbon‑emission constraints within an electronic goods supply chain. Originating from the Rest Of World region, the study responds to the growing pressure on manufacturers and retailers to extend product lifecycles, reduce e‑waste, and meet tightening regulatory requirements on greenhouse‑gas (GHG) emissions. By embedding environmental safeguards—such as preservation technology to slow deterioration—and social considerations like trade credit that improves cash flow for downstream partners, the model aligns closely with contemporary ESG imperatives in the electronics sector. Key quantitative outcomes demonstrate tangible ESG benefits: holding costs are differentiated between owned and rented warehouses ($150 vs $350 per unit/month), while a carbon‑tax coefficient of 0.001 translates into measurable emissions cost additions across all supply‑chain stages. The optimal solution under Case 1 yields a production rate of 4,738.5 units/month, a remanufacturing rate of 309.98 units/month, and a cycle time of 18.99 months, reducing total operating costs to $6,769.97 per month—lower than comparable models without secondary markets or trade credit. The model explicitly incorporates the TCFD recommendation for climate‑related risk disclosure by quantifying emissions at each node, satisfies SASB electronics criteria through detailed inventory and remanufacturing metrics, and supports GRI 302 (energy) and 303 (GHG emissions) reporting. By capturing dynamic demand sensitivity to price, advertising, and time, the framework also enhances resilience against market volatility, a core component of ESG risk management. For investors and regulators, this closed‑loop design offers a clear pathway to meet emerging disclosure standards such as the EU Taxonomy for sustainable activities and the SEC’s proposed climate‑risk reporting. The inclusion of trade credit improves liquidity across the supply chain, potentially lowering default risk and strengthening stakeholder trust—an aspect valued by ESG rating agencies. Communities benefit from reduced e‑waste streams and lower local pollution due to remanufacturing and controlled deterioration rates. However, implementation complexity and upfront capital for preservation technology or carbon accounting systems pose operational risks that must be managed through phased pilots and robust data governance. Overall, the study signals a maturation of sustainable supply‑chain engineering, encouraging broader adoption of closed‑loop models that simultaneously advance environmental stewardship, social responsibility, and economic viability.

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