Design of a Closed-Loop Supply Chain with Stochastic Product Returns

Abstract

This research focuses on the relation between time variation and the behaviors of a closed-loop supply chain with stochastic product returns. In recent years, activities that reduce environmental impact, such as recycling and reusing materials, have been increasing. Designing a closed-loop supply chain for recycling or reuse operations will support social responsibility and competitive advantage. However, in order to establish supply chains for sustainability, it is necessary to consider not only environmental benefits but also economic efficiency. Moreover, both the quantity of demand and returns are indefinite in an actual closed-loop supply chain. In this study, we assume that the arrival interval of return inward follows a logarithmic normal distribution. Further, we design basic models with a manufacturing and remanufacturing process to understand the behavior of a closed-loop supply chain with stochastic product returns in a finite horizon and investigate the influence of different choices in management on the cost and environmental factors.