Optimal Sourcing Decisions For Unreliable Reverse Supply Chains

In this work, we propose a single period stochastic inventory decision-making model that captures the trade-off between inventory policies and disruption risks for unreliable (both uncapacitated and capacitated) dual-sourcing reverse supply chain networks. Risk-management has emerged high at the corporate agenda as globalised supply chain networks are more stretched than ever due to offshoring and thus are more exposed to disruptions, while reverse logistics has been proven to constitute a profit center. In this environment, global companies have to scrutinize especially the role of major Asian economies (with large manufacturing capacities and huge markets), while conducting their strategic procurement planning. The developed model can be applied to a number of different scenario types encompassing various instances of disruptions to the collection of the end-of-life products, of the transportation system, and of the remanufacturing yield and capacity. Analytical closed-form solutions are obtained and important managerial insights on the merit of contingency strategies in managing uncertainties for reverse logistics networks are discussed.