Integrated Facility Location, Capacity, and Production Planning in a Multi-Commodity Closed Supply Chain Network

Abstract

In this paper the network design, the capacity and production planning of a closed-loop supply chain (CLSC) with multiple make-to-order (MTO) products consisting of common components is studied. The components can be remanufactured or can be purchased new from suppliers. It is assumed that products are returned by customers to the same facilities where the final products are sold. Transportation between facilities of the same type, i.e. redistribution, is allowed. The network is explored over multiple time periods. The objective of this work is to extend the strategic CLSC management by integrating decisions regarding production planning on an aggregate level to achieve an integrated optimization of facility locations, capacity equipment and production quantities at the facilities and forward and reverse material flows. For this purpose a mixed-integer linear optimization model is developed and solved for an example set of data.