Robust Stochastic Scenario-Based Approach To Closed-Loop Supply Chains With Uncertainty In Supply, Customer Demands And Return Rates

LUIS J. ZEBALLOS; CARLOS A. MÉNDEZ; ANA P. BARBOSA POVOA; AUGUSTO Q. NOVAIS

Conferencia; International Conference on Industrial Logistics (ICIL) 2014; 2014

Faculty of Mechanical Engineering and Naval Architecture, University of Zagreb, Department of Industrial Engineering

In this paper, a two-stage stochastic programming approach is used for analyzing the behavior of Closed-Loop Supply Chains (CLSCs) with uncertainty in supply, demands and return rates when designing and planning such systems. In addition, as part of the planning problem, this approach takes into account the capacity constraints on production, distribution and storage, as well as operational and environmental costs, and considers, by means of scenarios, the simultaneous integration of the three uncertainty sources. Since in stochastic approaches an important aspect to be considered is the selection of the objective function, this paper includes three performance measures that search for profit maximization. Thus and with the objective of achieving more robust solutions, besides the expected profit, two other objective functions that include risk criteria are also considered. The effectiveness of the proposed approach is established by means of an example considering different states of supply, demand and return rates. Thus, employing the stochastic programming approach, novel insights related to the behavior of CLSCs and the flow of returned products are derived.