The redesign of a warranty distribution network with recovery processes

•We give a nonlinear MIP model for the design of the warranty distribution network.•The model makes decisions on the forward flow of new and refurbished products.•The model also considers different recovery processes of returned products.•To solve the model we piecewise linearize the objective function and constraints.•The new network results in cost savings of 3.4% of the total distribution costs.

A warranty distribution network provides aftersales warranty services to customers and resembles a closed-loop supply chain network with specific challenges for reverse flows management like recovery, repair, and reflow of refurbished products. We present here a nonlinear and nonconvex mixed integer programming model for the design of the warranty distribution network of a semiconductor company which is operated by an outsourced third party logistics service provider. The application of the model to the real-life case provides an improved distribution network flow and rearranged warehouse and recovery locations, and resulted in weekly cost savings of 3.4% for the considered item.