A closed loop supply chain network design problem with multiple recovery options

Supply chain network design (SCND) is a challenging strategic issue for any company since it involves long-term decisions and high capital investment (see e.g. (Owen & Daskin, 1998) and (Melo, et al., 2009) for an overview of network design and facility location literature). Classical SCND problems include only forward flows, i.e. flows from suppliers to end customers. However, nowadays, many companies have to manage reverse flows of end-of-use products, containers, packages, etc. that move in the opposite direction of the traditional flows. Returns collected from customers may be directed in different ways depending on their quality and the possibility of reusing them. One of the most used recovery options is recycling, which is beneficial if different component materials (e.g. precious metal, steel, aluminum, plastic, etc.) can be separated and reused at a reasonable cost and without environmental harm. Another recovery option is to resell the returned products to secondary markets, if the items are still in good condition and if an active secondary market for used equipment exists. Another value-added operation, which can generate profit from returned products is remanufacturing. Remanufacturing processes include disassembly, cleaning, repairing, replacing parts and reassembly. Finally, if it is not possible to regain value from returned products, companies should dispose of them in a way to reduce harm to the environment.