PRISM: PRIority based SiMulated annealing for a closed loop supply chain network design problem

Concerns over environmental degradation, legislative requirements and growing needs of business have fueled the growth of Closed Loop Supply Chains (CLSC). We consider a CLSC and address the issues of designing the network and of optimizing the distribution. Four variants of the problem are considered. The problem is modeled as an Integer Linear Program (ILP). We develop a constructive heuristic based on Vogel's approximation method–total opportunity cost method to provide good initial solutions to a priority-based simulated annealing heuristic, to accelerate its convergence. Trials on a set of hypothetical datasets have yielded encouraging results. The methodology is also tested using a case study data of a company producing electronic products. Implications for sustainability are discussed.

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► We model a CLSC network with deterministic demands and uncertain product returns.
► We propose ILP models for location selection and distribution planning in the CLSC.
► A constructive heuristic based on VAM–TOC method is developed.
► A PBSA search heuristic is developed to find near optimal solution for the problem.
► Encouraging results are seen for test datasets and a real world case.