1. Reverse Logistics Networks
Steven Walker
Logistic Systems: Design and Optimization (Chapter 6)

2. Introduction Definition How is it different? 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)

3. Introduction Reasons for Reverse Logistic (RL) Networks: Environmental
Green initiatives
Electronic waste
Hazardous metals (RoHS)
Economic
Reduced raw material costs
Customer Service
Customer satisfaction

4. Introduction Applications Facility Location* Inventory Management*
Transportation*
Production Planning
*Example problem will focus on these applications.

5. Recovery Programs Economic interests Types of Recovery:
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

6. Types of Networks Directly Reusable Remanufacturing
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

7. Types of Networks (cont’d)
Repair Service
Defective products returned and repaired
Recycling
Recycling of raw materials

8. RL Network Framework Suppliers Distribution Customers Production
Collection
Intermediate Processing
Material Recycling

9. 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.

10. 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

11. Types of Decisions (cont’d)
Operational
Production Scheduling
Assignment of Labor
Disassembly and reassembly

12. 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:

13. Example Problem (cont’d)
Parameters
dik

14. Example Problem (cont’d)
Decision variables

15. Example Problem (cont’d)
Objective Function
Minimize costs
Inventory holding
Facility Location
Transportation

16. 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.

17. Example Problem (cont’d)
(3) Product storage capacity constraint
(4) Core storage capacity constraint
(5) Total number of facilities is less than P

18. 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

19. 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.

20. Questions? ??