Design of closed loop supply chain networks

This paper discusses the optimal design of a closed loop supply chain (CLSC) network. The CLSC network considers primarily commercial returns, which could be potentially recovered by light repair operations or by refurbishing. The annual estimate of commercial returns in the United States is in excess of $100 billion. A mixed integer linear programming model is developed to determine the optimal locations of the facilities and the distribution of flows between facilities in the CLSC to maximize the total profit. The model is illustrated using a realistic example. Sensitivity analysis is carried out to determine the effect of varying demands of customers who are willing to buy refurbished products and of percentage of returns.