Dynamic reverse supply chain network design under uncertainty: mathematical modeling and solution algorithm

Abstract

AbstractMotivated by the recovery of modular‐structured products, this study addresses the flexible design of a reverse supply chain (RSC) over a planning horizon while incorporating the dynamic uncertain behavior of product returns. The stochastic parameter is modeled as a scenario tree and therefore the concerned problem is formulated as a multistage mixed‐integer stochastic program. To alleviate the computational complexity of the proposed model, it is decomposed into smaller scenario cluster submodels associated with a number of subtrees that share a certain number of predecessor nodes in the original scenario tree. The submodels are coordinated into an implementable solution via a Lagrangian‐progressive hedging‐based method that employs a viable Benders decomposition based algorithm for solving each scenario cluster submodel. Based on a realistic scale case, computational results indicate the superiority of the proposed flexible dynamic RSC design model compared to the existing models. Results also demonstrate the efficiency of the proposed solution approach.