Integrated forward/reverse logistics network design under uncertainty with pricing for collection of used products

Mohammad Fattahi, Kannan Govindan*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

45 Citations (Scopus)

Abstract

This paper addresses design and planning of an integrated forward/reverse logistics network over a planning horizon with multiple tactical periods. In the network, demand for new products and potential return of used products are stochastic. Furthermore, collection amounts of used products with different quality levels are assumed dependent on offered acquisition prices to customer zones. A uniform distribution function defines the expected price of each customer zone for one unit of each used product. Using two-stage stochastic programming, a mixed-integer linear programming model is proposed. To cope with demand and potential return uncertainty, Latin Hypercube Sampling method is applied to generate fan of scenarios and then, backward scenario reduction technique is used to reduce the number of scenarios. Due to the problem complexity, a novel simulation-based simulated annealing algorithm is developed to address large-sized test problems. Numerical results indicate the applicability of the model as well as the efficiency of the solution approach. In addition, the performance of the scenario generation method and the importance of stochasticity are examined for the optimization problem. Finally, several numerical experiments including sensitivity analysis on main parameters of the problem are performed.
Original languageEnglish
Pages (from-to)193-225
Number of pages33
JournalAnnals of Operations Research
Volume253
Issue number1
Early online date28 Oct 2016
DOIs
Publication statusPublished - 1 Jun 2017
Externally publishedYes

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