A Network Design Model for a Resilient Closed-Loop Supply Chain with Lateral Transshipment

Abstract

This paper develops a model for the closed-loop supply chain network design with disruption risk. By considering supply disruption, two factors including extra inventory and lateral transshipment are used as resilience strategies. The main purpose is to reduce the supply chain costs due to the location decisions, quantity of products between different levels and lost sale. Disruption in a supply is assumed completely by different scenarios, and then the problem is formulated by a mixed-integer programming model. Furthermore, a two-stage stochastic approach is implemented to tackle uncertainty. Finally, a sensitivity analysis is carried out to examine the effects of the resilience strategies on the structure of the supply chain and to propose some managerial insight for using the model in real world situations.