Closed-loop supply chain network design under demand, return and quality uncertainty

2018-07-08
We consider the problem of designing a closed-loop supply chain (CLSC) network in the presence of uncertainty in demand quantities, return rates, and quality of the returned products. We formulate the problem as a two-stage stochastic mixed-integer program (SMIP) that maximizes the total expected profit. The first-stage decisions in our model are facility location and capacity decisions, and the second-stage decisions are the forward/backward flows on the network and hence the production/recovery quantities defined by the flow amounts. We solve the problem by using the L-shaped method in iterative and branch-and-cut frameworks. To improve the computational efficiency, we consider various cut generation strategies. Besides testing the performance of the considered solution methods, we also use our numerical results to estimate the value of the stochastic solution (VSS), the expected value of perfect information (EVPI), and the benefit of utilizing a CLSC network. Our results indicate that the uncertainty in demand has the highest impact and the uncertainty in return rate has the lowest impact on VSS and EVPI values, and including reverse chain increases the expected profit significantly.
European Conference on Operational Research (2018)

Suggestions

Closed-loop supply chain network design under demand, return and quality uncertainty
Biçe, Kadir; Batun, Sakine (2021-05-01)
We consider the problem of designing a closed-loop supply chain (CLSC) network in the presence of uncertainty in demand quantities, return rates, and quality of the returned products. We formulate the problem as a two-stage stochastic mixed-integer program (SMIP) that maximizes the total expected profit. The first-stage decisions in our model are facility location and capacity decisions, and the second-stage decisions are the forward/reverse flows on the network and hence the production/recovery quantities ...
Closed-loop supply chain network design under demand, return and quality uncertainty
Biçe, Kadir; Batun, Sakine; Department of Industrial Engineering (2017)
In this study,we focus o na closed-loop supply chain(CLSC) network design problem in the presence of uncertainty in demand quantities, return rates, and quality of the returned products. We formulate the problem as a two-stagestochastic mixed-integer program that maximizes the total expected profit. The first-stage decisions in our model are facility location and capacity decisions,and the second-stage decisions are production quantities and the forward/backward flows on the network. We solve the problem by u...
Optimal pricing and production decisions in utilizing reusable containers
Atamer, Busra; Bakal, İsmail Serdar; Bayındır, Zeynep Pelin (2013-06-01)
In this study, we focus on pricing and production decisions in utilizing reusable containers with stochastic customer demand. We consider a manufacturer that sells a single product to the customers in reusable containers with two supply options: (i) brand-new containers and (ii) returned containers from customers. The return quantity depends on both customer demand and the acquisition fee determined by the manufacturer. The unit cost of production using brand-new containers is different than the unit cost o...
Tactical inventory and backorder decisions for systems with predictable production yield
Mart, Turgut; Duran, Serhan; Department of Industrial Engineering (2010)
We consider a manufacturing system with stochastic demand and predictable production yield. The manufacturer has predetermined prices and limited production capacity in each period. The producer also has the option to save some inventory for future periods even if there is demand in the current period. The demand that is not met is lost or may be backordered for only one period. Our objective is to maximize the expected profit by choosing optimal production, save and backorder quantities in each period. We ...
Optimal pricing and production decisions in reusable container systems
Atamer, Büşra; Bakal, İsmail Serdar; Department of Industrial Engineering (2010)
In this study, we focus on pricing and production decisions in reusable container systems with stochastic demand. We consider a producer that sells a single product to the customers in reusable containers with two supply options: (i) brand-new containers, (ii) returned containers from customers. Customers purchasing the products may return the containers to the producer to receive a deposit price. The return quantity depends on both customer demand and the deposit price determined by the producer. Hence, th...
Citation Formats
S. Batun, “Closed-loop supply chain network design under demand, return and quality uncertainty,” presented at the European Conference on Operational Research (2018), Valencia, İspanya, 2018, Accessed: 00, 2021. [Online]. Available: https://hdl.handle.net/11511/71359.