A mixed integer nonlinear model for closed-loop supply chains with incentive and proximity based product returns

• Main Authors: Guico, Paolo Benjamin, Ventura, Veanney, Yamzon, Antonio Aloysius
• Format: text
• Language: English
• Published: Animo Repository 2015
• Subjects: Electronic industries; Industrial Engineering
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/7210
• Institution: De La Salle University

Due to environmental and health hazards, electronics firms in different locations are being required to collect used products for environmental purposes. In order to meet requirements, firms carry out collection activities and provide incentive offers to attract product returns. These product returns then may undergo recovery options such as refurbishing, manufacturing, cannibalizing and controlled disposal. The benefits and profitability of these recovery options are highlighted by related studies. A mixed integer non-linear programming model for a closed-loop supply chain including decisions for collection activities, incentive offers and recovery options is formulated and validated. Quantity is modeled as a function of incentive offers and distance between the collection centers (distribution/retail centers) and consumers, while quality of product return follows an arbitrary probability distribution, which is shifted by incentive level. Quality of product returns dictates the possible recovery options, which these can undergo. The model is subjected to scenarios which identified conditions wherein rebate or discount incentives is preferred and where low or high incentive levels are favored. High stockout cost to secondary consumers encouraged the model to perform more cash rebate activities to stimulate more product returns to satisfy secondary consumer demand while in another situation, when having high cost of activities while having high stockout cost to secondary consumers induced the model to choose to carryout discount activities as this would generate sales rather than the cash rebate which simply incentivizes the participation in the takeback program. The performance of the model under uncertain demand is also tested by Montecarlo simulation, and a target-oriented robust optimization procedure is used in solving the model and was shown to produce solutions which dominate the original solution. Finally, an excel-based interface, which uses GAMS as a solver, is presented to demonstrate possible application of the model in practice.