A multi-criteria optimization approach to manage environmental issues in closed loop supply chain network design

Imposition of strict environmental protection acts and the imperative need of best possible allocation of resources have given birth to the concept of “low carbon logistics.” Environmental laws force the manufacturers to extend their existing supply chains to form a closed loop supply chain (CLSC) through the setup of an efficient recovery system. In this paper, we attempt to deal with the environmental issues presented in the design of CLSC networks. The CLSC network proposed in the paper consists of four echelons in the forward chain and five echelons in the backward chain. To consider the environmental issues in the proposed CLSC network, we formulate a bi-objective integer nonlinear programming problem, and in order to solve it we propose an Interactive Multi- Objective Programming Approach Algorithm. This model determines the optimal flow of parts and products in the CLSC network and the optimum number of trucks hired by facilities in the forward chain of the network. A numerical experimentation of the proposed model to validate the applicability of the model is done with the help of data from a real life case study. The case presented in the paper is based on a geyser manufacturer, and its application on the model provides us with the underlying tradeoffs between the two objectives. The model also results in a very interesting fact that with the implication of the extended supply chain, a firm can create a green image of their product which eventually results in an increase in their demand while significantly reducing their usage of transportation in both directions.