Design of a robust closed-loop supply chain with backup suppliers under disruption scenarios

Abstract

Recently, owing to uncertain business environments, the supply chain has become more prone to disruption. In this paper, we model a closed-loop supply chain comprising suppliers, backup suppliers, factories, markets, collection centers, and disposal centers. We propose a robust optimization model for the design of a closed-loop supply chain network that is flexible and robust to disruptions. The proposed mathematical model considers, in the before-disruption stage, the location of the manufacturing factory, and contraction with the backup supplier in addition to under the contracting supplier, possibility of disruption of transshipment, and, in the reactive stage, depression of productivity at the facility. We aim to determine the location of the manufacturing facility, select the supplier, finalize the backup supplier contract, allocate stock at the before-disruption stage, and determine the quantities for production, transportation, and collection at the reactive stage of each scenario. The purpose is to minimize the total cost of the supply chain and regret value, which is the value that could reduce shortage or the delaying effect across different disruption scenarios. The proposed bi-objective mathematical model is solved using an optimization solver by weighting each objective function into a single objective problem. Computational results demonstrate the significant impact of considering disruptive events on the selected supply base and relieve of disruption effects of each scenario based on the decision of contracting backup suppliers.