Supplier selection and order allocation in CLSC configuration with various supply strategies under disruption risk

Abstract

Supplier selection and order allocation are important keys for reverse logistics and closed-loop supply chain networks especially with the presence of demand–supply imbalance risks. If such uncertainties and risks are not foreseen in the chain, and corresponding appropriate measures are not taken to handle them, irreparable damages would be expected consequently. The importance of this issue in closed-loop supply chains is more appreciated due to the importance and the effect of this chain on the environment. In this research, the disruption risk and the uncertainties related to the demand, market price, and the number of returned products are simultaneously considered. Purchasing from the backup suppliers and spot market are considered, to take the proper measures in case of uncertainties. Two-stage stochastic programming model is used to express the uncertainty. The decisions on the purchase from the uncertain suppliers, and reserving from backup suppliers are made in the first step. Then, after determining the uncertainties, return decisions (purchasing from the backup suppliers, spot market and the use of returned products) are made. Besides, we develop our model with CVaR risk measurement tool, and assess risk neutral and risk averse models. We also investigate how changes in the key problem parameters can affect sourcing strategies of a firm.