Assessing performance and uncertainty in developing carpet reverse logistics systems

The US carpet industry is striving to reach a 40% diversion rate from landfills by 2012, according to a memorandum of understanding signed by industry and government officials in 2002. As a result, they are interested in methods of setting up a reverse logistics (RL) system which will allow them to manage the highly variable return flows. In this paper, we simulate such a carpet RL supply chain and use a designed experiment to analyze the impact of the system design factors as well as environmental factors impacting the operational performance of the RL system. First, we identify the relative importance of various network design parameters. We then show that even with the design of an efficient RL system, the use of better recycling technologies, and optimistic growth in recycling rates, the return flows cannot meet demand for nearly a decade. We conclude by discussing possible management options for the carpet industry to address this problem, including legal responses to require return flows and the use of market incentives for recycling.