Abstract
Closed-loop supply chains involve forward flows of products from production facilities to customer zones as well as reverse flows from customer zones back to remanufacturing facilities. We present an integrated modeling framework for configuring a distribution system with reverse flows so as to minimize the total cost of satisfying customer demand and remanufacturing the returned items that are recoverable. Given a set of existing plants and customer zones, our basic model identifies the optimal number and location of distribution centers and return centers assuming that all plants have remanufacturing capability. We devise a Lagrangian heuristic for this problem. The proposed solution method proved to be computationally efficient for solving large-scale instances of the closed-loop supply chain design problem. The potential benefits of the integrated model are demonstrated by comparing its results with those obtained from an alternative approach that determines optimal forward and reverse network structures sequentially. We also extend the basic model to determine the optimal locations for establishing remanufacturing facilities. Using the extended model, we study the conditions under which the return centers can be co-located with remanufacturing facilities rather than being established at the downstream echelons of the supply chain. Different from the existing works on facility location-allocation models for closed-loop supply chain network design, the main focus in this paper is on the investigation of structural properties of the network such as co-locating return centers with remanufacturing facilities and quantifying the benefit of modeling forward and reverse flows simultaneously rather than sequentially.
Highlights
The second half of the twentieth century witnessed the global rise of a consumption-based economy
“Is there a significant benefit due to designing forward and reverse networks simultaneously rather than sequentially?” and “Under which conditions can the return centers be co-located with remanufacturing facilities rather than being established at the downstream echelons of the supply chain?” Through extensive computational experiments, we find that the general level of capacity utilization in remanufacturing facilities is a key factor determining the potential benefits of the integrated design approach
In the previous sections we studied an integrated design approach, which involves simultaneous decisions regarding the location of distribution centers (DC) and return centers (RC) as well as forward and reverse flows in the closed-loop supply chain
Summary
The second half of the twentieth century witnessed the global rise of a consumption-based economy. Chen et al [7] deviate from other studies on CLSC network design and focus on the following two questions: How do the uncertainties in market size, return quantities and recovery rate affect the profitability of the CLSC and how is product recovery strategy influenced by the consumer perception of remanufactured products and variable cost structure To this end, the authors develop a stochastic mixed-integer quadratic model use a solution approach based on an integration of the integer L-shaped decomposition with sample average approximation which enables to handle many scenarios. Based on a set of existing plants (each with given manufacturing and remanufacturing capacities) and a set of customer zones (each with given demand and return quantities for a single product), the model determines the optimal number and location of the DCs and RCs so as to minimize the total cost of establishing and operating this closed-loop network. Redundant from the viewpoint of model formulation, constraints (12) tighten the lower bounds (LB) of the subproblems that arise due to Lagrangian relaxation of P
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