Supply chain coordination with reverse logistics: A vendor/recycler-buyer synchronized cycles model

Abstract

In this paper, we develop a synchronized cycles vendor-buyer coordination model where the single vendor is both a producer and recycler/remanufacturer, and there are multiple buyers. This model is an extension of the general single-vendor multi-buyer synchronization model to incorporate reverse logistics, and it includes costs associated with production, remanufacturing, transportation and holding inventory. The reverse logistics in the model is achieved by having the vendor pick up returned products from the buyers and then reprocess them for resale. Similar to the original synchronization model, the synchronization of our model is attained by coordinating the vendor's production cycle with both new products’ delivery cycles for transportation from the vendor to the buyers and used products’ pick-up cycles for transportation from the buyers to the vendor/recycler. A genetic algorithm is used for solving the problem. Numerical results show the benefits from this new synchronized cycles model compared to independent optimization with reverse logistics. Our findings further show that under low levels of returning products, the synchronized cycles coordination model with reverse logistics can reduce total system costs when compared with the independent optimization model without reverse logistics. Examples also show how the model with reverse logistics can perform economically better than the model without reverse logistics.