Abstract

The increasingly negative effects of product development and manufacture on the environment are pushing firms to move towards producing new generations of products, i.e. green products. However, the financial effect of green products in the future is a main concern for managers in charge of new product development (NPD) projects. This research focuses on profit analysis of a new product, which is designed based on recyclability, environmentally friendly disposal, and an energy and emission efficiency strategy, in order to equip decision makers with a proper forecast of profitability of such green new products. In this research, first, a primary mixed integer model is proposed to assess the trade-off analysis of green products based on the Cost Volume Profit model in a life-cycle framework. Then, the model is developed based on dynamic programming and a quantitative choice model is applied in the automotive industry. Finally, two numerical examples are used to evaluate the models. The results show the interaction between profitability and environment-friendly attributes of products based on recyclability, disassembly, and an environmentally friendly disposal strategy. It also provides a decision support methodology for management in order to decide about the future of the project during the business analysis stage of the new product development process.