Supply-chain network configuration for product recovery

Abstract

The current growth in consumption results in resource reduction, increasing waste production and, ultimately, environmental deterioration. Both government and consumer concerns regarding these issues have been driving reduction efforts in waste and natural resource-usage. These environmental issues, in addition to economic opportunities, result in the concept of product cycles that oppose the traditional ‘one-way’ economy. One approach is to create product recovery networks in which used products are collected, reprocessed and later redistributed to the customer. Product recovery networks differ from typical forward-only networks. Therefore, specific work considering their issues is necessary. In this work, we study a closed-loop supply chain in which manufacturers produce new products and remanufacture used products. The decisions to be made are: which warehouses and collection centres should be open, which warehouses should have sorting capabilities and how much material should be transported between each pair of sites. The multi-period integer programming model uses the present worth method to jointly analyse investment and operational costs. A sensitivity analysis of the model is performed, and conclusions are made regarding model behaviour and performance.