A multi-echelon closed-loop supply chain model with multi-recovery systems and carbon regulation

Abstract

This study develops a multi-echelon closed-loop supply chain (CLSC) optimization model for durable products by considering refurbishment, recycling processes, and carbon regulation. A mixed integer linear programming (MILP) is developed for CLSC network design involving suppliers, manufacturers, refurbishment centers, recycling centers, disposal centers, assembly centers, collection centers, and retailers. A carbon cap-and-trade policy is adopted to lessen the emissions emitted from some activities in CLSC. The objectives of the study are to determine the optimal allocations of echelons and to investigate the influences of collection rate, refurbishment rate, recycling rate and carbon policy on CLSC. A numerical example is presented to illustrate the application of the proposed model, and a sensitivity analysis is provided to investigate the effect of key parameters on the model’s behavior and system performance. The results show that the changes in collection, refurbishment, and recycling rates significantly influence the optimal allocation decisions. The results also show that by adopting a carbon cap-and-trade policy, CLSC can benefit both economically and environmentally. However, the level of benefits obtained will depend significantly on the size of the carbon cap and the selling or buying price of carbon in the market.