A green logistics evaluation model with real options approach

Abstract

This paper provides a general model for the enterprises that want to execute reverse logistics. The enterprises executing a green strategy can bring the benefit of green goodwill and customer identification. Otherwise, the real profit of executing green reverse logistics is the key point to managers. The authors use the static analytic tool - the net present value method to evaluate the relevant costs and prices whenever enterprises execute green reverse logistics in the previous paper (Lin and Lu, (2012)). To enhance the effective management, this paper promotes not only the static tool but also the measurement tool of project activity - the real options approach to get the point of executing green reverse logistics and clarify the feasibility of green reverse logistics. By combining the practical and academic analyses, this paper can enhance managers with the solving proposal model to get the balance of green costs and profits.