Improving the profitability of wastepaper dealerships An application of price forecasting and management simulation

Abstract

A computer simulation of a hypothetical independent wastepaper dealership was used to test the effects of price forecasting and formal management policies on profitability. Several forecasting techniques were tested as were several management policies. Policies combining forecasting with price/inventory controls or with six-month contracts (between dealers and collectors) produced higher contributions to profit than a policy of maintaining a constant margin between price paid to collectors and price paid by mills.