Reverse logistics network design: a case of mobile phones and digital cameras

Abstract

The world is producing electrical and electronic waste (e-waste) more than ever before. According to a UN study, between 2009 and 2014, the global annual production of electronic waste has been approximately fixed at 42 million tonnes. The improper and unscientific disposal of e-waste is a big threat to the environment. The purpose of this paper is to develop a mathematical model for the network design of a multi-product, multi-echelon reverse logistics system. Different recovery options such as remanufacturing, repairing and recycling are considered in this study. Based on the residual value of the used product, the returns are graded into two categories—low product residual value (PRV) and high PRV returns. Although the process of grading results in additional grading costs, it assists the decision maker in choosing appropriate recovery option. An integer linear programming formulation is used to model and solve the problem. Two commonly used consumer electronic goods, mobile phones and digital cameras, are considered for validation. The proposed model determines the optimal number and location of different facilities to be established. By way of explicit consideration of the product structure, the analysis is carried out down to the level of components across the different stages of the supply chain. Further, detailed analysis is performed to determine minimum quantities of high PRV returns for a remanufacturing facility to be economically viable. The results provide interesting information about the relevance of quantum of products with high PRV on the network design decisions. Also, the results underscore the importance of transportation costs on the overall profitability of the reverse supply chain.