Modeling and multi objective optimization of closed loop supply chains
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