Cost benefits from standardization of the packaging glass bottles

This study deals with an integrated recycling system where two competing brewers standardize their glass bottles to implement the producer responsible recycling system. Immediate benefits from the standardization are three folds. Firstly, the sorting and exchange processes of the bottles collected for reuse by each brewer become no longer necessary. Secondly, cost reduction is achieved through streamlining of collection and reuse processes. Finally, under the stochastic demand of glass bottles their inventory holding costs and lost sales cost are reduced via inventory pooling. Through the development of the mathematical models we determine an optimal operation policy of two brewers that maximizes the sum of benefits obtained from standardization. Numerical examples are solved to show the validity of the model.