Optimizing a Reverse Logistics System by Considering Quality of Returned Products

Document Type : Research Paper

Authors

1 School of Industrial Engineering, College of Engineering, University of Tehran, Iran

2 Ted Rogers School of Information Technology Management, Ryerson University, Toronto, Canada and School of Industrial Engineering, College of Engineering, University of Tehran, Iran

Abstract

Coordination is one of the critical issues in remanufacturing systems that can persuade supply chain parties to make optimal centralized decisions leading to higher profits. Accordingly, this paper aims to examine a reverse logistics system, including one manufacturer along with a collector who collects used products based on the consumers' willingness to return such products. Consumers’ willingness is dependent on the take-back price, which is adjusted based on various quality levels affecting the processing cost of the collected items. This study developed mathematical models under both decentralized and centralized scenarios. Besides, to align the interests of both members and better profit-sharing, a cost-sharing contract is implemented. According to the results, in the coordination model, the take-back price of the high-quality level is increased compared to the decentralized model while the take-back price of the low-quality level is decreased. Hence, it suggests collecting and repairing higher-quality products to achieve higher profits for the whole system. Besides, the paper provides valuable suggestions for managers to resolve the conflicts of interest among participants of reverse logistics systems in an efficient manner.

Keywords

References

       [1]        Agrawal, S., and Singh, R. K. (2020). Outsourcing and reverse supply chain performance: a triple bottom line approach. Benchmarking: An International Journal.
       [2]        Mathiyazhagan, K., Rajak, S., Panigrahi, S. S., Agarwal, V., and Manani, D. (2020). Reverse supply chain management in manufacturing industry: a systematic review. International Journal of Productivity and Performance Management.
       [3]        Dev, N. K., Shankar, R., and Qaiser, F. H. (2020). Industry 4.0 and circular economy: Operational excellence for sustainable reverse supply chain performance. Resources, Conservation and Recycling, 153, 104583.
       [4]        Lampón, J. F., Pérez-Elizundia, G., and Delgado‐Guzmán, J. A. (2021). Relevance of the cooperation in financing the automobile industry's supply chain: the case of reverse factoring. Journal of Manufacturing Technology Management.
       [5]        Govindan, K., Soleimani, H., and Kannan, D. (2015). Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future. European Journal of Operational Research, 240(3), 603-626.
       [6]        Qiang, Q., Ke, K., Anderson, T., and Dong, J. (2013). The closed-loop supply chain network with competition, distribution channel investment, and uncertainties. Omega, 41(2), 186-194.
       [7]        Blumberg, D. F. (2004). Introduction to management of reverse logistics and closed loop supply chain processes: CRC Press.
       [8]        Guide Jr, V. D. R., and Van Wassenhove, L. N. (2001). Managing product returns for remanufacturing. Production and Operations Management, 10(2), 142-155.
       [9]        Lehnig, A. C., Dewal, R. S., Baer, L. A., Kitching, K. M., Munoz, V. R., Arts, P. J., ... and Stanford, K. I. (2019). Exercise training induces depot-specific adaptations to white and brown adipose tissue. Iscience, 11, 425-439.
     [10]      Lizarraga-Mollinedo, E., Carreras-Badosa, G., Xargay-Torrent, S., Remesar, X., Mas-Pares, B., Prats-Puig, A., ... and Bassols, J. (2021). Catch-up growth in juvenile rats, fat expansion, and dysregulation of visceral adipose tissue. Pediatric Research, 1-9.
     [11]      Stevels, A. (2001, December). Experiences with the take-back of white and brown goods in the Netherlands. In Proceedings Second International Symposium on Environmentally Conscious Design and Inverse Manufacturing (pp. 489-493). IEEE.
     [12]      Lechner, G., and Reimann, M. (2015). Reprocessing and repairing white and brown goods-the RUSZ case: an independent and non-profit business. Journal of Remanufacturing, 5(1), 1-29.
     [13]      Giri, B., Chakraborty, A., and Maiti, T. (2017). Pricing and return product collection decisions in a closed-loop supply chain with dual-channel in both forward and reverse logistics. Journal of manufacturing systems, 42, 104-123.
     [14]      Singh, R. K., and Agrawal, S. (2018). Analyzing disposition strategies in reverse supply chains: fuzzy TOPSIS approach. Management of Environmental Quality: An International Journal.
     [15]      Wang, M., Wang, B., and Chan, R. (2020). Reverse logistics uncertainty in a courier industry: a triadic model. Modern Supply Chain Research and Applications.
     [16]      Liu, H., Lei, M., Deng, H., Leong, G. K., and Huang, T. (2016). A dual channel, quality-based price competition model for the WEEE recycling market with government subsidy. Omega, 59, 290-302.
     [17]      Aćimović, S., Mijušković, V., and Rajić, V. (2020). The impact of reverse logistics onto green supply chain competitiveness evidence from Serbian consumers. International Journal of Retail and Distribution Management.
     [18]      Heydari, J., Govindan, K., and Sadeghi, R. (2018). Reverse supply chain coordination under stochastic remanufacturing capacity. International Journal of Production Economics, 202, 1-11.
     [19]      Heydari, J., and Ghasemi, M. (2018). A revenue sharing contract for reverse supply chain coordination under stochastic quality of returned products and uncertain remanufacturing capacity. Journal of Cleaner Production, 197, 607-615.
     [20]      Kaya, O. (2010). Incentive and production decisions for remanufacturing operations. European Journal of Operational Research, 201(2), 442-453.
     [21]      Govindan, K., and Popiuc, M. N. (2014). Reverse supply chain coordination by revenue sharing contract: A case for the personal computers industry. European Journal of Operational Research, 233(2), 326-336.
     [22]      Yu, H., and Solvang, W. D. (2017). A carbon-constrained stochastic optimization model with augmented multi-criteria scenario-based risk-averse solution for reverse logistics network design under uncertainty. Journal of cleaner production, 164, 1248-1267.
     [23]      Tseng, S. H., Wee, H. M., Song, P. S., and Jeng, S. (2019). Optimal green supply-chain model design considering full truckload. Kybernetes.
     [24]      Aldoukhi, M., and Gupta, S. M. (2020). Use of Maximal Covering Location Problem to Design a Closed Loop Supply Chain Network Under Product Substitution. In Applications of Management Science. Emerald Publishing Limited.
     [25]      Kushwaha, S., Ghosh, A., and Rao, A. K. (2020). Collection activity channels selection in a reverse supply chain under a carbon cap-and-trade regulation. Journal of Cleaner Production, 260, 121034.
     [26]      Dutta, P., Das, D., Schultmann, F., and Fröhling, M. (2016). Design and planning of a closed-loop supply chain with three way recovery and buy-back offer. Journal of Cleaner Production, 135, 604-619.
     [27]      Cai, X., Lai, M., Li, X., Li, Y., and Wu, X. (2014). Optimal acquisition and production policy in a hybrid manufacturing/remanufacturing system with core acquisition at different quality levels. European Journal of Operational Research, 233(2), 374-382.
     [28]      Modak, N. M., Modak, N., Panda, S., and Sana, S. S. (2018). Analyzing structure of two-echelon closed-loop supply chain for pricing, quality and recycling management. Journal of Cleaner Production, 171, 512-528.
     [29]      Giri, B., and Sharma, S. (2015). Optimizing a closed-loop supply chain with manufacturing defects and quality dependent return rate. Journal of manufacturing systems, 35, 92-111.
     [30]      Taleizadeh, A. A., Moshtagh, M. S., and Moon, I. (2018). Pricing, product quality, and collection optimization in a decentralized closed-loop supply chain with different channel structures: Game theoretical approach. Journal of Cleaner Production, 189, 406-431.
     [31]      Heydari, J., Chaharsooghi, S. K., and Alipour, L. (2009). Animation supply chain modelling and diagnosis: a case study in animation industry of Iran. International Journal of Business Performance and Supply Chain Modelling, 1(4), 319-332..
     [32]      He, L., Mao, J., Hu, C., and Xiao, Z. (2019). Carbon emission regulation and operations in the supply chain supernetwork under stringent carbon policy. Journal of cleaner production, 238, 117652.
     [33]      Xie, J., Zhang, W., Liang, L., Xia, Y., Yin, J., and Yang, G. (2018). The revenue and cost sharing contract of pricing and servicing policies in a dual-channel closed-loop supply chain. Journal of Cleaner Production, 191, 361-383.
     [34]      Zhang, Z., Liu, S., and Niu, B. (2020). Coordination mechanism of dual-channel closed-loop supply chains considering product quality and return. Journal of cleaner production, 248, 119273.
     [35]      Wang, N., Song, Y., He, Q., and Jia, T. (2020). Competitive Dual-Collecting Regarding Consumer Behavior and Coordination in Closed-Loop Supply Chain. Computers and Industrial Engineering, 106481.
     [36]      Bakhshi, A., and Heydari, J. (2021). An optimal put option contract for a reverse supply chain: case of remanufacturing capacity uncertainty. Annals of Operations Research, 1-24.
     [37]      Yi, P., Huang, M., Guo, L., and Shi, T. (2016). Dual recycling channel decision in retailer oriented closed-loop supply chain for construction machinery remanufacturing. Journal of Cleaner Production, 137, 1393-1405.
     [38]      Genc, T. S., and De Giovanni, P. (2017). Trade-in and save: A two-period closed-loop supply chain game with price and technology dependent returns. International Journal of Production Economics, 183, 514-527.
     [39]      Tang, S., Wang, W., and Zhou, G. (2020). Remanufacturing in a competitive market: A closed-loop supply chain in a Stackelberg game framework. Expert Systems with Applications, 161, 113655.
     [40]      Toktaş-Palut, P. (2021). An integrated contract for coordinating a three-stage green forward and reverse supply chain under fairness concerns. Journal of Cleaner Production, 279, 123735.
     [41]      Wu, D., Chen, J., Li, P., and Zhang, R. (2020). Contract coordination of dual channel reverse supply chain considering service level. Journal of Cleaner Production, 260, 121071.
     [42]      Jin, L., Zheng, B., and Huang, S. (2021). Pricing and coordination in a reverse supply chain with online and offline recycling channels: A power perspective. Journal of Cleaner Production, 298, 126786.
     [43]      Bai, H. (2008). Reverse Supply Chain Coordination and Design for Profitable Returns--an Example of Ink Cartridge. Worcester Polytechnic Institute.  
     [44]      Heydari, J., Govindan, K., and Jafari, A. (2017). Reverse and closed loop supply chain coordination by considering government role. Transportation Research Part D: Transport and Environment, 52, 379-398.
     [45]      Jafarkhan, F., Yaghoubi, S., Gilani Larimi, N., and Farhang Moghadam, B. F. M. (2019). The Inventory–Routing Problem for Distribution of Red Blood Cells considering Compatibility of Blood Group and Transshipment between Hospitals. Advances in Industrial Engineering, 53(3), 31-44.
     [46]      Changizi, M., Rahmani, D., and Rmezanian, R. (2020). A Multi-Visit Heterogeneous Drone Routing Model Considering Recharging Decision in Disaster. Advances in Industrial Engineering, 54(1), 53-73.
     [47]      Zafari, F., and Shishebori, D. (2019). Designing a Multi-Objective Three-Stage Location-Routing Model for Humanitarian Logistic Planning under Uncertainty. Advances in Industrial Engineering, 53(4), 149-167.
     [48]      Bakhtiari, M., Ebrahimnejad, S., and Yavari-Moghaddam, M. (2019). A Mathematical Model for Solving Location-Routing Problem with Simultaneous Pickup and Delivery Using a Robust Optimization Approach. Advances in Industrial Engineering, 53(4), 185-208.
     [49]      Chen, C. (2001). Design for the environment: A quality-based model for green product development. Management Science, 47(2), 250-263.
     [50]      Gao, J., Han, H., Hou, L., and Wang, H. (2016). Pricing and effort decisions in a closed-loop supply chain under different channel power structures. Journal of Cleaner Production, 112, 2043-2057.
     [51]      Modak, N. M., Kazemi, N., and Cárdenas-Barrón, L. E. (2019). Investigating structure of a two-echelon closed-loop supply chain using social work donation as a Corporate Social Responsibility practice. International Journal of Production Economics, 207, 19-33.
     [52]      Mondal, C., and Giri, B. C. (2020). Pricing and used product collection strategies in a two-period closed-loop supply chain under greening level and effort dependent demand. Journal of cleaner production, 121335.
     [53]      Stekelorum, R., Laguir, I., Gupta, S., and Kumar, S. (2021). Green supply chain management practices and third-party logistics providers’ performances: A fuzzy-set approach. International Journal of Production Economics, 235, 108093.
     [54]      Santana, J. C. C., Guerhardt, F., Franzini, C. E., Ho, L. L., Júnior, S. E. R. R., Cânovas, G., ... and Berssaneti, F. T. (2021). Refurbishing and recycling of cell phones as a sustainable process of reverse logistics: A case study in Brazil. Journal of Cleaner Production, 283, 124585.
Advances in Industrial Engineering
Volume 54, Issue 2
April 2020
Pages 165-184

Files

Share

How to cite

Statistics