Closed-loop supply chain configuration for new and reconditioned products: An integrated optimization model |
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| Affiliation: | 1. Department of Operations and IT, ICFAI Business School (IBS) Hyderabad, ICFAI Foundation for Higher Education (IFHE) University, Shankerpally Road, Hyderabad, A.P. 501203, India;2. Department of Marketing and Supply Chain Management, Fogelman College of Business & Economics, The University of Memphis, Memphis, TN 38139, USA;1. College of Management, National Taiwan University, Taipei, Taiwan, ROC, email: cchen026@ntu.edu.tw;2. CUHK Business School, Chinese University of Hong Kong, Hong Kong, China, email: zhoux@baf.cuhk.edu.hk;3. Foisie School of Business, Worcester Polytechnic Institute, Worcester, MA 01609, USA, email: jzhu@wpi.edu;1. Department of Industrial Engineering, Qafqaz University, Baku, Azerbaijan;2. Department of Mechanical and Industrial Engineering, Ryerson University, Toronto, ON M5B 2K3, Canada;1. Department of Operations and IT, IBS Hyderabad, ICFAI Foundation for Higher Education (IFHE) University, Shankerpally Road, Hyderabad, Telangana 501203, India;2. Managing Director, Performance Improvement, FTI Consulting, 2001 Ross Avenue, Suite 300, Dallas, TX 75201, USA;3. Department of Technology and Innovation, University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark;4. Institute for a Secure and Sustainable Environment, University of TN, Knoxville, TN, USA;1. Department of Industrial and System Engineering, Indian Institute of Technology, Kharagpur 721302, West Bengal, India;2. Nottingham University Business School China, The University of Nottingham Ningbo China, 199 Taikang East Road, Ningbo 315 100, Zhejiang, China;3. School of Economics, The University of Nottingham Ningbo China, 199 Taikang East Road, Ningbo 315 100, Zhejiang, China |
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| Abstract: | Closed-Loop Supply Chain Management (CLSCM) is considered as a strategic response to the call for corporate sustainability while further expanding the scope of value creation to include product reconstruction. The Closed-Loop Supply Chain (CLSC) performance is directly related to the CLSC network design. The CLSC network design, with long-term and strategic connotations, involves selection of an integrated network of partner organizations to be engaged on one hand in the forward supply chain processes relevant to families of existing and new products and also involved in reverse supply chain activities relevant to reconstruction of the returned products. At the tactical level, Closed-Loop Supply Chain Configuration (CLSCC) attempts to address issues pertinent to launch of a new product and its reconstruction. The CLSC network design is well studied in the current literature, but addressing the CLSCC is neglected. To study the CLSCC problem we: (a) develop an integrated optimization model for problem; (b) present a real-world case study of a battery manufacturer; (c) based on the case study, we conduct a comprehensive set of computational experiments followed by a series of what-if analyses to compare profitability of the Forward Supply Chain Configuration (FSCC) versus the CLSCC; and (c) discuss the key observations and managerial implications drawn from the computational experiments, applicable to other real-world instances. The significant outcomes of the study suggest that: (i) performance of the firm׳s base case integrated CLSCC model is significantly better than the current supply chain model (ii) the sales-price ratio of new battery is found to be negatively related with the maximum acquiring price of used batteries; (iii) combination of sales price ratios of new and reconditioned batteries determines the total net profit for a given return rate. Finally, important managerial insights and scope for future research are discussed. |
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| Keywords: | Operations management Marketing Case study Product life cycle Production planning and control Mathematical programming |
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