Closed-loop supply chain design considering quantity-dependent price and decentralized local waste management

Abstract

With the increasingly widespread use of household plastic products, environmental pollution caused by plastic waste has emerged as a severe problem. Despite the efforts of academia and government bodies, plastic recycling rates worldwide remain low. Thus, this study aims at establishing a closed-loop supply chain design model for household plastic recycling. We develop a bilevel optimization model to reflect decentralized decision-making between a manufacturer and public sectors and propose a strategy to obtain optimal solutions. The proposed model considers two critical aspects of the problem: decentralized local waste management and quantity-dependent price. Numerical experiments are conducted based on real annual operation data, and various managerial insights are derived from sensitivity analyses. Additionally, we recommend various strategies to mitigate potential social conflicts arising from increasing volumes of plastic waste as well as directions for government policy aimed at enhancing the plastic recycling rate.