Investigation of closed-loop supply chains with product refurbishment as integrated location-inventory problem

Abstract

Traditionally, the three most important decisions in Supply Chain Management (SCM) are: Facility location, inventory management and distribution decisions. These decisions are often analysed separately in order to reduce the computational complexity of the corresponding planning problems. This typically results in non-optimal decisions, as in reality the different decisions interact with each other. The major focus of this paper is to bridge the gap between location and inventory planning. The resulting problem is known as location-inventory problem and the e-commerce business serves as motivating example. A solution methods (second-order cone programm) is developed which is able to solve large-scale real-world problem instances. The structure of the closed-loop supply chain network is investigated and altogether promising insights are obtained for decision makers in SCM.