Enhancing sustainable closed-loop supply chains efficiency: Comparative insights on subsidy and surcharge strategies in Mexico City

Abstract

The study focuses on managing polyethylene terephthalate (PET) waste and enhancing Closed-Loop Supply Chain (CLSC) systems, particularly in Mexico City, where improper collection mechanisms lead to significant PET disposal and informal recycling. The research investigates two Deposit Refund System (DRS) strategies designed to boost PET collection through consumer incentives or penalties. By integrating collected PET into CLSCs, the study aims to mitigate the environmental damage caused by PET waste through structured disposal, recycling, and incineration processes. This approach employs a bi-objective mixed-integer linear programming model to balance and optimize economic costs and environmental outcomes. It utilizes the augmented $\epsilon$-constraint method to manage the trade-offs between these two objectives. A practical application of this model is demonstrated through a pilot study analyzing the recycling and incineration in two different neighborhoods. The results show that the DRS enhances PET collection rates substantially from 12% to 49% in the subsidy DRS and up to 54% in the surcharge DRS. These improvements lead to 37% and 42% of PET bottles being processed in environmentally friendly manners under each respective strategy. Moreover, the surcharge strategy proved more adaptable to fluctuations in return rates and was flexible regarding the deposit level. Notably, while reverse income covers the deposit cost, energy generated from incineration accounts for about 25% of this cost, underscoring the economic viability of this approach. This research highlights the effectiveness of DRS in improving PET waste management and contributing to formal recycling efforts, thus supporting a more sustainable and environmentally friendly supply chain integration.