Co-ordination of a supply chain with reverse logistics : vehicle routing problem and CO₂ emission

Abstract

In a supply chain model, coordination of the vendor and buyers plays an important role to minimize the system cost. However, in many coordinated systems, environmental issues such as reverse logistics and greenhouse gas emission are not considered because of the complexity of the problem. Reverse logistics includes waste management, parts recovery or product recovery through recycling. Most research in reverse logistics focuses only on a small area of reverse logistics systems, such as network design, production planning and environmental issues. Air pollution resulting from transportation is an important negative environmental impact of supply chains. Hence, taking environmental concerns such as reverse logistics and CO₂ emission into vendor-buyer coordination is of vital importance and optimized planning of the routing and delivery schedule is critical. This thesis proposes and develops mathematical models and solution methods for a coordinating system involving reverse logistics and CO₂ emissions. 1. A coordination model for a single-vendor multi-buyer supply chain with reverse logistics is proposed. The coordination in the model is achieved by synchronizing the delivery and used products pick-up cycles of the buyers with the production cycle of the vendor. Buyers are allowed to choose their own ordering cycles but these cycles must be integer factors of the vendor's production cycle. The performance of the synchronized cycles model in terms of minimizing the total system cost is compared with that of the independent policy model where buyers and vendor are optimizing their own cost independently. 2. The second area of investigation of this research is to incorporate the vehicle routing problem into the model developed in 1 so as to better represent the real-life situation. Transportation cost for delivery and used product pick-up is added to the total system cost. The transportation cost includes the cost of dispatching trucks and the cost per unit distance travelled by the trucks. Due to the complexity of the problem, one-step and two-step hybrid heuristics involving GA and ALNS are developed to obtain near optimal solution for the coordinated supply chain with the vehicle routing problem. Performance of these heuristics are compared. 3. In addition to reverse logistics and vehicle routing problem, CO₂ emission is also incorporated in the coordinated supply chain. The first objective is to minimize the total system cost which includes the inventory cost, routing cost, and the cost of CO₂ emission. Secondly, instead of minimizing the total system cost, the objective function is changed to minimize the CO₂ emission. The performance in terms of CO₂ emission is compared with previous models presented in this thesis.