Reverse Logistics
Networks
Steven Walker
Logistic Systems: Design and Optimization
(Chapter 6)
Introduction
 Definition

Reverse logistics –

Handling of the return flows of product or
equipment back from consumer for reuse,
recovery, or recycling.
 How is it different?


Reverse flow of goods back from customer
May require additional facilities and
transportation costs for material handling
(disassembly)
Introduction
 Reasons for Reverse Logistic (RL) Networks:

Environmental




Economic


Green initiatives
Electronic waste
Hazardous metals (RoHS)
Reduced raw material costs
Customer Service

Customer satisfaction
Introduction
 Applications




Facility Location*
Inventory Management*
Transportation*
Production Planning
*Example problem will focus on these
applications.
Recovery Programs
 Economic interests
 Reduces raw material costs
 Types of Recovery:
 Product – recycled directly or repaired and sent back
under warranty
 Component – Product is dismantled and components
are used in same or similar products
 Material – recyclables like metal, paper, or glass
 Energy - Incineration
Types of Networks
 Directly Reusable


Easily re-used with very little added effort.
Example – pallets, bottles, or containers
 Remanufacturing


Returned products dismantled and parts or
components used like new
Example – copy machine, aircraft engine
Types of Networks (cont’d)
 Repair Service

Defective products returned and repaired
 Recycling

Recycling of raw materials
RL Network Framework
Suppliers
Material
Recycling
Distribution
Production
Intermediate
Processing
Collection
Customers
Types of Decisions
 Strategic



Must include reverse flow recovery path in
network
Must consider costs related to forward and
reverse channels that returned material travel
through
Location of plants and warehouses for
recovery

Ex.- collection points and remanufacturing plants.
Types of Decisions (cont’d)
 Tactical

Integration of return flows with forward flows.


Combining or separating return flow goods with
forward flow?
Isolating forward goods from reverse goods in
warehouses to prevent shipping errors?
 Designated holding areas, “QA Jail”



Deciding when to use new or recycled parts?
Organization of labor?
When should products be repaired?
 Repair, Scrap, Send back to OEM
Types of Decisions (cont’d)
 Operational



Production Scheduling
Assignment of Labor
Disassembly and reassembly
Example Problem
 Closed-loop logistics model for remanufacturing
 Closed-loop – forward flows are closely related to
reverse flows
 Model involves both inventory costs, facility location,
and transportation
 Remanufacturing is both environmentally and
economically friendly in the re-use of returned products
 Cores = returned used products

Source: Jayaraman, V., et.al. (1999). A closed-loop logistics model
for remanufacturing. Journal of the Operational Research Society,
50:497-508.
Example Problem (cont’d)
 Parameters
dik
Example Problem (cont’d)
 Decision variables
Example Problem (cont’d)
 Objective Function

Minimize costs



Inventory holding
Facility Location
Transportation
Example Problem (cont’d)
 Constraints
 (1) Total number of remanufactured products does
not exceed the demand
 (2) Total number of remanufactured products is less
than the total cores of the product brought into the
facility.
Example Problem (cont’d)
(3) Product storage capacity constraint
(4) Core storage capacity constraint
(5) Total number of facilities is less than P
Example Problem (cont’d)
(6) Restricts the amount of cores that can be supplied
from a collection zone
(7) Non-negativity
(8) Binary (yes/no) decision variable Zj
Example Problem (cont’d)
 How is the problem solved?
 Can be solved with LP solvers (GLPK)
 Commercial Solvers (CPLEX)




Because these problems can get large in a hurry,
commercial solvers are necessary due to the # of
variables
Interfaces with C++
Uses the simplex method much like other LP
solvers
Heuristics also used due to the size of these
problems.
Questions?
 ??