Optimizing inventory and pricing decisions in a Closed-Loop Supply Chain: a sustainable approach towards manufacturing and remanufacturing

Abstract

The Closed-Loop Supply Chain (CLSC) is widely acknowledged as a sustainable alternative to conventional supply chains; nonetheless, the management of inventory and pricing decisions continues to be intricate. This study analyzes a two-layer supply chain model encompassing both the forward supply chain (FSC) and the reverse supply chain (RSC). The FSC produces new items, whereas the RSC manages end-of-life (EOL) products for remanufacturing. The emphasis is on refining inventory management, pricing tactics, and waste disposal procedures to improve the sustainability of CLSC operations. The model is solved with conventional optimization methods executed in LINGO and Mathematica software. Numerical findings indicate that, in Case I, the optimal selling prices for new and remanufactured products are $837.5750 and $421.6721, respectively, with a cycle time of 1.5314 months, resulting in a total profit of $1,378,007.35. In Case II, when the remanufacturing rate is higher than the manufacturing rate, the respective values are $836.9679 and $421.5517, with a cycle time of 1.6017 months, yielding a total profit of $1,379,658.11. The enhancement in profitability illustrates the responsiveness of pricing and scheduling choices in CLSC design with a higher rate of remanufacturing. Sensitivity study confirms the model’s robustness across several parameter settings. The results provide quantifiable insights into how synchronized inventory and pricing strategies might improve economic performance while fostering sustainability through remanufacturing processes.