Extension of multi-commodity closed-loop supply chain network design by aggregate production planning

In this work the influence of production and capacity planning on decisions regarding facility location, distribution quantities and component remanufacturing (and vice versa) in a closed-loop supply chain network (CLSCN) with multiple make-to-order products is studied. A mathematical model, the facility location, capacity and aggregate production planning with remanufacturing (FLCAPPR) model, for designing the CLSCN, for planning capacities at the facilities and for structuring the production and distribution system of the network cost-optimally, is formulated. It consists of a facility location model with component remanufacturing over multiple time periods, which is extended by capacity and production planning on an aggregate level. The problem is solved for an example set of data which is based on previous CLSC research in the copier industry. In a numerical study the effect of the extended planning approach on the decision to process returned products is determined. Furthermore, the FLCAPPR model is solved for different returned product quantities and numbers of periods in the planning horizon to study the influence on the network design and on the procuring, production and distribution quantities. It turns out that decisions regarding the locations of and the capacity equipment at facilities and decisions regarding the production and distribution system are interdependent; therefore, they have to be managed jointly. Furthermore, it is shown that the decision to process returned products and use remanufactured components in the production does depend not only on the costs, but also on the quantity of returned products and the length of the planning horizon

STRATEGIC PLANNING OF CIRCULAR SUPPLY CHAINS WITH MULTIPLE DOWNGRADED MARKET LEVELS: A METHODOLOGICAL PROPOSAL

Recent legislation has recognized the importance of adopting Circular Economy (CE) principles in supply chain (SC) restructuring. The primary objective is to create circular supply chains (CSCs) that effectively reintegrate end-of-life (EOL) products into production networks through processes such as reusing, remanufacturing, and recycling. This paradigm shift toward circularity aims to enhance resource efficiency, extend product lifecycle, and minimise waste, thereby aligning firms with sustainable practices while providing them with a competitive advantage. In line with the goals of the CE, this study focuses on the design and optimisation of strategic decisions within a circular supply chain (CSC). To achieve this aim, a bi-objective mixed-integer linear programming (MILP) model is developed. This model represents a significant contribution as it offers a compact and generalized formulation for dealing with CSC design problems. The proposed MILP model encompasses several key decision variables and considerations. It determines the optimal number of downgraded market levels to be activated, the location of forward and treatment facilities as well as the optimal product flow within the CSC. Furthermore, the model takes into account the cannibalisation effects associated with the demand for both new and recovered products, ensuring a comprehensive analysis of the system dynamics. To solve the complex mathematical model, the augmented epsilon-constraint (AUGMECON2) method is employed. The utilisation of this method enables decision-makers to obtain practical solutions within reasonable time frames. The computational results obtained from applying the MILP model illustrate its encouraging potential and effectiveness in dealing with strategic decision-making problems within CSCs