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 (contd)

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 (contd)

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 (contd)

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 (contd)

Parameters

dik

Example Problem (contd)

Decision variables

Example Problem (contd)

Objective Function

Minimize costs

Inventory holding
Facility Location
Transportation

Example Problem (contd)

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 (contd)

(3) Product storage capacity constraint

(4) Core storage capacity constraint
(5) Total number of facilities is less than P

Example Problem (contd)

(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 (contd)

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?
??