Product and closed-loop supply chain design with uncertain return flows

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

Tucson, Arizona

Workshop; FOCAPO 2017 (Foundations of Computer-Aide Process Operation); 2017

University of Wisconsin - Madison; The Dow Chemical Company

This paper addresses the product and network design for a multi-product, multi-echelon and multi-period closed-loop supply chain (CLSC). Decisions associated with the products to manufacturing (new and remanufactured) and their associated raw materials (new and recovered) are simultaneously considered with the network design. The network superstructure includes two types of customers (first and second markets), raw material suppliers, factories, distribution centers, customer demands, recovery centers, recycle centers, final disposal locations and re-distribution centers. Uncertain quality and quantity of the return flows are considered. Risk management related to critical uncertain parameters is performed. A two-stage stochastic linear programming approach is developed to explore and exploit network improvements by using risk management in the product and network design problem. The model objective function is based on the conditional value at risk (CVaR) concept applied to the profits. The formulation aims to find feasible solutions with high economic and environmental benefits while managing raw materials, products, return flows and network structure. A case study from a European consumer goods company is employed in order to show the effectiveness of the approach