Modeling and Simulation of Closed-Loop Supply Chains Considering Economic Efficiency

Abstract

This study proposes a basic model of closed-loop supply chains which includes not only traditional forward supply chains for the generation of products but also reverse supply chains for the reuse of products in consideration of economic efficiency for MTO (Make to Order) companies. The model consists of four model components, i.e., clients, manufacturers, suppliers, and remanufacturers. A remanufacturer is added to the previous model of forward supply chains as a new model component which collects used products from clients and provides reusable parts to manufacturers. Remanufacturers as well as manufacturers and suppliers modify their schedules and negotiate with each other in order to determine suitable prices and delivery times of products. Remanufacturers stimulate clients to discard used products to meet the demand of reusable parts. They can increase the amount of reused products and reduce wastes by creating a balance between supply and demand of reusable parts.