Optimal Design and Planning of Supply Chains with Integrated Forward and Reverse Flows under Uncertainty

Markets increasing competition coupled with a growing concern with the environment have created a new way of thinking when designing and planning supply chains. The aim of increasing supply chains’ sustainability has been emerging. One step towards the achievement of such aim is the integration of reverse logistics into the traditional supply chains. This has created the closed-loop supply chains where not only the supply of final customers’ is considered but also reverse logistics aspects are well thought-out. The complexity of the supply chains has therefore increased and the associated decisions are even more subject to uncertainties calling for the need of developing efficient tools that can help decision making of such systems. In this paper, a mixed integer linear programming (MILP) formulation is developed for the design and planning of supply chains, considering simultaneously production, distribution and reverse logistics activities, taking into account products’ demand uncertainty with the goal of maximizing the expected net present value. The results provide details on sizing and location of plants, warehouses and retailers, definition of processes to install, forward and reverse flows and inventory levels. The model is applied to a representative European supply chain case study in order to show its applicability.