Modeling operation and inventory for rare earth permanent magnet recovery under supply and demand uncertainties

Abstract Rare earth permanent magnets (REPMs) play an essential role in various applications such as renewable energy production, and aerospace and defense related products. Rare earth elements (REEs) such as neodymium and dysprosium are used in REPMs, and the supply of these REEs has experienced volatility. To mitigate this risk, REEs may be recovered from end-of-life (EOL) products such as computer hard disk drives (HDDs). To facilitate REE/REPM recycling, this paper develops an operation and inventory management strategy to explore the profitability 1) under uncertain market supply and 2) with varying component/material values whose demand also faces significant uncertainties. The resulting strategy provides recommendations for the ordering and processing quantities associated with REPM containing products. An upper bound solution on the recovery profit was proposed to assess the performance of the developed strategy. We found that the proposed strategy helps increase the overall profit, and its performance is close to the upper bound. Finally, several scenarios were evaluated to examine how market conditions affect profit. To the best of authors’ knowledge, this research is the first study on REPM recycling that provides a promising strategy to the relevant industry.