A multi-period closed-loop supply chain network design with circular route planning

The routing problem is a critical issue in closed-loop supply chain neatwork design, but it is typically simplified in the literature. In contrast to the traditional approach of a point-to-point delivery between two logistics nodes or a routing problem at the terminal distribution stage in a closed-loop supply chain (CLSC), we propose a multi-period CLSC network that considers circular routing in the network’s echelons to reduce empty running. First, we formulate reversible transportation mechanism (RTM) and circular transportation mechanism (CTM), and construct two CLSC network models for a three-echelon supply chain network respectively. The models fully consider backorders, delayed returns, delivery lead time, and carbon emissions cost into the model. Second, a heuristic method with initialization and improvement stages is proposed to tackle the large-scale NP-hard problems, and the local search process is guided via simulated annealing. Third, the model and solution are applied to the real-life case of a toy manufacturer in China. The results show that: compared to RTM, CTM can effectively improve the utilisation of transport vehicles and reduce the number of transport vehicles used in the network; the network operating cost of CTM is significantly less than that of RTM; no matter how the carbon tax on emission will be, the average carbon emission will be reduced under CTM as compared to RTM; the heuristic algorithm we design can efficiently solve large-scale CLSC design problems under both transport mechanisms.