Design and analysis of a closed-loop supply chain in presence of promotional offer

Abstract

Closed-loop supply chain (CLSC) has been an area of increasing attention during the last decade due to its economic impact, strict legislations and social awareness. Profitability of any remanufacturing process is mainly driven by the effective and efficient acquisition of used products. In this paper, a market-driven recovery framework is proposed to acquire the used products from consumers by taking into account their buying patterns as well as the willingness to accept a promotional offer. The proposed framework is integrated with an optimisation model for a multi-period CLSC to maximise the overall profit of the system by determining the optimal discount amount along with the decision of finding optimal manufacturing, remanufacturing and disposal quantity. The findings of the study provide several insights to the decision-makers that lead to better performance of the entire closed-loop system. The analysis suggests a trade-off among manufacturing/remanufacturing cost, penalty cost for not fulfilling the legislation criterion and collection cost due to the employment of promotional offer. Sensitivity analysis is performed to observe the effect of various important parameters on the system’s performance. Finally, a comparative study has been conducted to examine the performance of the CLSC with vs. without promotional offer.