A closed-loop supply chain model for supplier-manufacturer-retailer system with rework and waste disposal

Abstract

In this paper, we develop a closed-loop supply chain by considering inspection, sorting, waste disposal, and rework. There are three parties involved in the model, namely retailer, manufacturer, and supplier. The retailer's demand is satisfied by newly manufactured items or remanufactured items. The model uses two recovery processes toward used items, namely remanufacturing and refurbishing. The recoverable items which cannot be recovered to as good as new item will be categorized as refurbishable items and will be sold to a secondary market. The defective items produced from manufacturing system will be reworked. The objective of the model is to determine retailer's time cycle, frequency of remanufacturing cycle, delivery frequency of finished items from manufacturer to retailer in the remanufacturing phase, delivery frequency of finished items from manufacturer to retailer in the regular production phase, and delivery frequency of raw material from supplier to manufacturer by maximizing the joint total profit. An iterative procedure is suggested to obtain the optimal decision variables. A numerical example is presented to illustrate the application of the model.