Multi‐stage supply network design in case of reverse flows: a closed‐loop approach

Design of distribution networks is one of the most critical issues in the management of supply networks. When the supply chain takes into account the whole life of the product (warranty, remanufacturing, recycle, disposal, etc.), the adverse effects on the logistic flow is quite considerable on the structure of the network. For this reason, these aspects should be considered in network design. This paper addresses the possibility to apply different supply chain (SC) design approaches in presence of reverse flows, analysing the network structure where the considered flows are forward flow exclusively, or forward and reverse flows, or integral closed‐loop flows. The study also presents an integrated methodology in closed‐loop network design, based on mixed‐integer programming, considering as inputs the most important driver as fixed and variable costs (installation, transportation, handling, inventory and production), facilities attributes (type, location, capacity and costs), stochastic demand, multi‐echelon, multi‐product, multi‐production, multi‐distribution and multi‐transportation system. A real industrial application to validate the proposed closed‐loop SC design methodology and a comparison between different SC design approaches are presented as a result of this paper.