Design and planning of supply chains with integration of reverse logistics activities under demand uncertainty

In this paper, a mixed integer linear programming (MILP) formulation is developed for the design and planning of supply chains with reverse flows while considering simultaneously production, distribution and reverse logistics activities. It is also considered products’ demand uncertainty using a scenario tree approach. As main goal the model defines the maximization of the expected net present value and the results provide details on sizing and location of plants, warehouses and retailers, definition of processes to install, establishment of forward and reverse flows and inventory levels to attain. The model is applied to a representative European supply chain case study and its applicability is demonstrated.

► We model the design and planning of closed-loop supply chains. ► The flexibility effect on the profitability of five network structures is studied. ► We implement products’ demand uncertainty using a scenario tree approach. ► We evaluate the impact of the distribution network dependency of the scenarios. ► The model is applied to a representative European supply chain case study.