Cost Efficiency of Closed–Loop Supply Chain in the Presence of Dual-Role and Undesirable Factors

Supply chain management is essential for the success of firms and customer satisfaction. In addition, a suitable performance evaluation system is vital to the effective management of the supply chain. Due to the importance of cost management in the supply chain, an approach based on Data Envelopment Analysis (DEA) is proposed in the current study for evaluating the cost efficiency of closed-loop supply chains while dual-role factors and undesirable outputs exist. DEA is a beneficial mathematical programming method for evaluating and analyzing the relative efficiency of decision maker units with multiple inputs and outputs. Indeed, in this study, the cost efficiency scores of supply chains with three components, supplier, manufacturer and repair and recycling, as well as forward and reverse flows are measured using DEA technique. The assumption of weak disposability on undesirable outputs is considered. Also, a case study is provided to illustrate and to analyze the proposed method. The results show a correct identification of the role of the factors and the incorporation of the undesirable and reversible factors in supply chain systems play the important role in the correct calculation of the cost efficiency in each of components and whole supply chain. Moreover, in the introduced method, the overall cost efficiency can be represented as the weighted sum of the cost efficiency of components.