Monte Carlo factorial design approach for assessing environmentally responsible manufacturing cost-benefit tradeoffs

• Online Access: http://hdl.handle.net/2047/d10017884

The increased degradation rate of natural resources and heightened interest in sustainable resources have led to a variety of practices that companies can implement to reduce their environmental impact. To create a culture for change in industry, both engineering and business students should understand how to assess the tradeoffs among economic, technical and environmental factors if they are to become socially, as well as fiscally responsible designers, manufacturers or leaders. Therefore, students must be imparted with knowledge regarding interactions among multiple disciplines of economics, technology, environment, as well as social and cultural values. One challenge of teaching sustainability involves creation of an interdisciplinary educational environment. Educational gaming may be an effective and efficient tool for teaching the multi-faceted nature of sustainability. The use of educational games enhances learning by providing a more realistic model of the environment, deeper learning by experience, along with knowledge sharing and decision making among the team members. With these perspectives, a board game was designed to help students learn about environmentally benign technologies in the context of the automobile supply chain to explore trade-offs among technology, profitability and environmental impacts. Due to the variety of approaches toward sustainability, there are often ambiguities associated with defining, implementing and measuring sustainability, there is no indicator set of ""universally accepted"" metrics that are derived based on compelling theory and data analysis or have become influential in policy-making processes. This has become an important challenge for comparing alternatives. While encouraged to adopt environmentally friendly practices, companies are frequently concerned that environmental compliance costs will reduce their profitability. Despite a massive body of literature and studies aimed at providing insights, there are no conclusive studies that address the dynamic interactions of the system or sources of uncertainty. Therefore, an exploration of the relationship between economic and environmental performance of business systems and the factors that impact the system can provide important insights for decision makers. To address these issues, a review of different environmental assessment methods and their limitations was undertaken, where, some of the more important factors that impact the economic and environmental performance of firms are identified. Given significant uncertainties about future environmentally responsible manufacturing, regulations, incentives, 'green' technologies, and overall economic benefits, a probabilistic approach is illustrated using computer simulation and factorial experiments for assessing economic-environmental tradeoffs. For a simplified automobile supply chain that was based on a board game, Monte Carlo models were developed to simulate the uncertainties and corresponding corporate decisions as chance events that occur over time. The model tracks the total costs for production, compliance, and implementation as well as an arbitrary green score for different corporate decision strategies. Three types of decision makers were investigated to reflect decisions that are considered more or less environmentally benign. Factorial experimental designs were conducted on the simulation models to develop predictive equations for cost and green score and to identify those model parameters (e.g., incentives, compliance rates, fine amounts, technology development rate, and others) that would have the greatest influence the results. Results also illustrate the impact of uncertainty on the competing cost and environmentally responsible manufacturing objectives.