A closed-loop supply chain model with uncertain return and learning-forgetting effect in production under consignment stock policy

Abstract

This paper considers a manufacturer–retailer closed-loop supply chain where the manufacturer’s production process is subject to both learning and forgetting, and inventories of the manufacturer and the retailer are managed by consignment stock policy. The demand of the finished product is linearly dependent on the retail price. The return rate of used product is random and returned used items are inspected to select those which qualify for remanufacturing. The proposed model is demonstrated with a numerical example. A sensitivity analysis is performed to identify the parameters which have significant impacts on the optimal decisions of the supply chain system. Some managerial insights of the model leading to improved strategies beneficial for firms and environment are also discussed.