Divide and Conquer Optimization for Closed Loop Supply Chains

Abstract

Environmental concerns and government regulations have encouraged/forced real-world supply chains to take back used product for recycle. A smart supply chain should therefore leverage significantly on the returned "used products" to produce new products at nominal cost and time. In such closed loop supply chains, the crucial challenge is to synchronize the used products recycling system, the production facility and the new product distribution system in the presence of uncertain customer demands and used product returns. The main motivation of this study is to improve the performance of closed loop supply chains using a divide and conquer optimization scheme. In this paper, it is shown that the manner in which the closed loop supply chain is divided into various subsystems, the way in which interactions between the subsystems are handled and the optimization sequence adopted can help to improve the profitability of the supply chain with minimal computational load. Comparisons between the proposed method and traditional single objective optimization are made to illustrate the advantages of the divide and conquer approach to closed loop supply chain optimization.