Multi-product and multi-period closed loop supply chain network design under take-back legislation

Abstract

This paper addresses the closed loop supply chain (CLSC) network design problem for durable products with consideration of take-back legislation. Each returned end-of-life product can be dismantled into different components. A recovery option is adopted for each component based on its quality level, its economic value, and its environmental impact. First, a multi-product multi-period mixed integer linear programming (MIP) model is proposed while assuming a 100% recovery target. The latter is then extended in order to incorporate other take-back legislations: namely, regulation based on other recovery targets and regulation based on reward-penalty (RP) mechanisms. Sensitivity analysis is then carried out in order to capture how some model parameters influence the take-back decision, the integration of the reverse supply chain, and its structure when there are no regulatory restrictions on the take-back of returns. In addition, the CLSC performance, in terms of environment and economic efficiency, is investigated under different take-back legislations. For the considered case study, a comparative study shows that a higher reverse service level and CLSC profit can be achieved when a regulation based on RP mechanism is implemented.