On the use of RFID in the management of reusable containers in closed-loop supply chains under stochastic container return quantities

• We study a closed-loop supply chain that manages containers.
• The return fraction of containers is assumed stochastic.
• An RFID system can be used to improve container management.
• The impact of RFID on container management is analyzed.
• RFID can improve the performance of the system.

This paper studies a closed-loop supply chain that uses containers for transporting products from a supplier to a retailer. At the retailer, used containers are collected and returned to the supplier. The supplier inspects returned containers, and either repairs and reuses or disposes them. This paper studies the case where the fraction of containers that are returned to the supplier is stochastic, and where an RFID system can be used to support the tracking of container positions in the supply chain. The use of RFID leads to improved information on the return of containers and better return predictability as well as higher return rates, which we model as an increase in the mean return rate of containers and a reduction in return variance. The paper first develops a mathematical planning model for this scenario, and it then studies how the use of RFID impacts the performance of the system. In addition, it analyzes under which conditions the use of RFID is economical, and in which situations traditional container systems should be preferred.