Coordination of production planning and distribution in closed-loop supply chains
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ORIGINAL ARTICLE
Coordination of production planning and distribution in closed-loop supply chains Yusuf Kuvvetli1
•
Rızvan Erol1
Received: 8 August 2019 / Accepted: 3 February 2020 Springer-Verlag London Ltd., part of Springer Nature 2020
Abstract A closed-loop supply chain structure organises material and information flows from origin points to consumption points, including production, recycling, disposal, and other reverse logistic activities. Some integration problems arise with this structure including production, inventory, location, routing, distribution, collection, recycling, and routing. The integration problems that are facing scientific researchers include inventory routing, location routing, and location inventory. This study considers the integration problem of a closed-loop supply chain for the production, distribution, collection, and recycling quantities, along with the distribution and collection routes for each time period of a finite planning horizon. We refer to this problem as the ‘‘Closed-Loop Supply Chain Integrated Production-Inventory-Distribution-Routing Problem’’ (CLSC-PRP). A mathematical model is proposed that is the first to determine both quantities and routes for the CLSC-PRP simultaneously. As the problem is known to be NP-hard in terms of computational complexity, a simulated annealingbased decomposition heuristic is developed for solving large-scale CLSC-PRP instances. The results of the proposed mathematical model for the CLSC-PRP are compared with the results of the developed heuristic and two separate models that manage forward and backward production routing problems. An extensive comparative study indicated the following: (i) the proposed model was able to reduce the cost required for operating the total supply chain by an average of 12%, along with providing a positive impact on the environment and (ii) the proposed heuristic is able to generate solutions that are close to optimal in most cases. Keywords Closed-loop supply chains Production routing problem Closed-loop supply chain integration Meta-heuristics
1 Introduction A closed-loop supply chain (CLSC) involves the coordinated planning and managing of all production, distribution, and collection processes along with the reverse processes, such as recycling, remanufacturing, or refurbishing, in the same supply chain. In a typical CLSC with recycling, new products are manufactured at the production facility and are then stored in a warehouse to be distributed to customers via distributors. Returned products are collected from customers by collectors or distributors and are then transferred to a recycler or the manufacturer. A & Yusuf Kuvvetli [email protected] 1
returned product is a product that has one of the following conditions: out of order, out of date, unsold, recalled, or includes pull-and-replace repair parts [1]. CLSCs have been increasing in many areas, not only owing to recent legislation (e.g. white and brown goods disposal legislation in the Neth
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