Modeling and multi objective optimization of closed loop supply chains

Eleonora Bottani, Roberto Montanari, Marta Rinaldi, Giuseppe Vignali

CHALLENGE - This study investigates the issue of optimizing the asset management process in a real closed-loop supply chain (CLSC), consisting of a pallet provider, a manufacturer and 7 retailers. Given the limited number of studies related to the optimization of returnable transport items, or RTIs in the supply chain, this study tries to contribute to existing literature by proposing a model to optimize the cost of RTIs management in a real CLSC.

SOLUTION - A detailed simulation model, based on an adapted Economic Order Quantity (EOQ) policy is developed under Microsoft Excel to reproduce the re-order process of assets by the manufacturer and the corresponding flow of RTIs in the CLSC. A multi-objective optimization, including both economic and strategic key performance indicators of the system, is then carried out exploiting modeFRONTIER software​. The optimization investigates three scenarios, which refer to as many operating conditions of the manufacturer. Scenario 1 basically reproduces the current operating conditions of the manufacturer, while scenarios 2 and 3 are both hypothetical, and describe situations where the manufacturer would like to minimize the purchase of new assets and the pick-up of assets from its customers, respectively. For each scenario, the optimal configuration (i.e., the setting of the asset management process that performs best in the multi-objective optimization) is identified.

BENEFITS -  The scenarios 1 and 3 are found to generate the most interesting performance of the assets management process, from both the economic and strategic perspectives. Because the present paper is grounded on a real CLSC, the results are expected to be useful to logistics and supply chain managers, to support the evaluation of the performance of CLSCs