3.4 Business models for cell phone reuse and recycling
We are now going to discuss profitability and business models of refurbishers, which are the central agents of the closed-loop supply chain for cell phones, since they handle the vast majority of collected end-of-use handsets.
Figure 5 shows the estimated average operating profits of refurbishers in 2006 in the USA and in 2003 in the UK as a function of the reuse yield. In both cases, average operating profits are calculated as with the costs and revenues from Tables 1, 2, and 5, and rbeing the reuse yield, i.e., the fraction of collected cellphones that can be reused. Coincidentally, both profit functions break even at 50% reuse yield, the only difference being that the profit function of 2003 UK refurbishers has a
higher gradient, i.e., grows faster with increasing reuse yield, than the profit function of 2006 US refurbishers.
The reason for this is that in the 2003 UK case Rreuse–Creuse is around $6.30 larger than in the 2006 US case, which is mostly due to the $6 difference in average revenue.
However, this is partially offset by a downward shift of the 2003 UK profit function relative to the 2006 US one.
The reason for this is that the 2003 UK reverse logistics cost are $3.30 higher than those of the 2006 US case, which is almost exclusively due to a higher average return incentive.