Optimal inventory policy in a closed loop supply chain system with multiple periods
Abstract: This paper aims to
model and optimize the closed loop supply chain for maximizing the profit by
considering the fixed order quantity inventory policy in various sites at
multiple periods.
Design/methodology/approach: In forward supply chain, a standard
inventory policy can be followed when the product moves from manufacturer,
distributer, retailer and customer but the inventory in the reverse supply
chain of the product with the similar standard policy is very difficult to
manage. This model investigates the standard policy of fixed order quantity by
considering the three major types of return-recovery pair such as commercial
returns, end- of- use returns, end –of- life returns and their inventory
positioning at multiple periods. The
model is configured as mixed integer linear programming and solved by IBM ILOG
CPLEX OPL studio.
Findings: To find the performance of the model a numerical example is
considered for a product with three Parts (A which of 2nos, B and C) for 12
multiple periods. The results of the analysis show that the manufacturer can
know how much should to be manufacture in multiple periods based on Variations
of the demand by adopting the FOQ inventory policy at different sites
considering its capacity constraints. In addition, it is important how much of
parts should be purchased from the supplier at the given 12 periods.
Originality/value: A sensitivity analysis is performed to validate the
proposed model two parts. First part of the analysis will focus on the
inventory of product and parts and second part of analysis focus on profit of
the company. The analysis which provides some insights in to the structure of
the model.
Keywords: Closed loop supply
chain(CLSC), Fixed order quantity(FOQ), Mixed Integer Programming, Inventory
Author: SasiKumar A.,
Natarajan K, Ramasubramaniam MuthuRathna Sapabathy, Deepaknallasamy K.K
Journal Code: jptindustrigg170015