Closed-loop supply chain network model with recycling, re-manufacturing, refurbishing, and corporate social responsibility

Abstract

This paper developed a closed-loop supply chain network (CLSCN) optimization model with corporate social responsibility (CSR), recycling, remanufacturing, refurbishing, and transaction cost on a supply chain consisting of manufacturers, retailers, a new product demand market, and a retailer-refurbished product demand market. The manufacturers produce substitutable products using raw materials from two sources, new and recycled. The retailers, in turn, face the demands of new products and retailer-refurbished products, and recycle from the new product demand market. We investigated a number of cases, and our results indicate that CSR can enhance CLSCN performance but more to the party closest to the demand market. It also shows that consumer behavior, competition, CSR investment, and sustainable practices (new material procurement, recycling, refurbishing, re-manufacturing, and environmental costs), play an essential role in CSR and closing the loop. With higher landfill cost, more willingness to return from consumers, less disutility for consumers to return, higher level of recycling and refurbishing, and higher re-manufacturing rate, CSR level tends to improve. Policy-makers can use these findings to encourage firms to improve CSR in CLSCN.