Designing a realistic ICT closed loop supply chain network with integrated decisions under uncertain demand and lead time☆
Introduction
The effort for diminishing the environmental pollution and spreading it in the world is very precious in most industries. In order to attain this goal, performing some appropriate activities such as designing a closed loop supply chain is required. A closed loop supply chain is a distribution system with a combination of manufacturing and remanufacturing [1], [2]. Many firms have commenced reducing the waste and gaining profit from the both of forward and reverse supply chains. A reverse logistic begins from the end users where the used products are gathered and then managing them through the various such decisions as recycling in order to obtain further raw materials, remanufacturing with the intention of reselling to the second markets and disposing some of the used parts [3], [4].
In supply chain networks, facility location and inventory policies have an important role in the managerial decisions. The inventory studies disregard the strategic decisions such as facility location and their related costs, whereas the location studies neglect the operational such decisions as inventory and shortage issues, more importantly the uncertainty of demand and the impacts of reorder policies on them [5]. Therefore, taking into account the facility location and inventory control simultaneously leads to the more effective decisions.
Considering supply chain problems in stochastic environment makes them closer to the real world [6]. Lead time of an order, which is the time between the placement of an order and delivering it, has a significant role in inventory policies of supply chain networks and assuming it stochastic have been investigated by many researchers (see, e.g., [7], [8]). Stochastic demand and stochastic lead time in logistic activities and industries are critical factors [9].
Nowadays in competitive environment, market share is a key indicator for companies, which shows the way of a firm’s activity against its rivals. One of the important factors, which affects the market share is pricing. Specifying the optimal value of it could help the companies to reach the higher profit and setting an appropriate and sensible selling price is one of the challenging activities for the manufacturers and retailers [10]. In the reverse logistic, the amount of money paid the end users in order to return their used products, has a main role. It means that as this amount increases, more used products will be returned and it should be analyzed critically due to the purpose of maximizing the profit of companies [11].
The effort for obtaining the relationship between the demand of customers and the price of the products in the supply chain networks is a significant activity. It means that the price, which is determined by the seller, affects the end demand of the product [12]. Purchasing behavior of the customers shows that the price of a product is an important factor, which the pattern of demand is influenced by it [13]. So, when the price of the products is determined in a best way, the demand will increase and the company could reach the maximum profit.
Examining the impact of demand correlation on location, allocation and inventory decisions in multi-level networks leads to the good managerial insights and helps the companies to reach their goals. It means that the strategic and operational decisions of a supply chain can be affected highly by the demand correlation [14]. Thus, in the relevant studies, considering this assumption makes the decision more reliable.
A significant issue in inventory management is shortage. Taking into account this issue in modeling the inventory problems makes them more applicable and reliable and any company should have an appropriate plan in the presence of different situations of shortages [15], [16]. When the shortage is allowed, the lost sale, backorder or a mixture of them could be occurred.
One of the presented services in ICT industry is internet protocol television (IPTV) service. In IPTV service, the television content is delivered by internet protocol networks. It means that the television programs are received through the internet connection instead of common ways such as an antenna or a satellite dish. So it is possible to watch the programs by a computer or a set-top box (STB) connected to a television. IPTV is presented in three types: video on demand (VOD), time-shifted IPTV and live IPTV. The STB is the ICT product that is studied in this research.
Due to the implemented researches, some gaps are identified and presented here. Designing an ICT closed loop supply chain in a continuous review inventory policy with integrated location–inventory decisions and stochastic lead time and demand, has not been studied yet. Taking into account the stochastic lead time will make the model to be closer to the real world. Because in the real world the lead time is stochastic in most of the time and there is not an exact time for delivering the product from the suppliers to the C–D centers. Obtaining the optimum price of the product in location–inventory problems with the mentioned assumptions in this model is a very vital issue that is neglected. Another issue that should be noticed is correlated demand. It means that the demand of customers in different regions is correlated and there is a correlation coefficient between them. Presenting a mixture of lost sales and backorders in a continuous review inventory policy in this model is another gap that could be studied to help the model more reliable. And finally shortage in inventory control problems is a basic assumption because the demands might not be supplied completely.
According to the above mentioned gaps, in this work we present a multi-echelon ICT closed loop supply chain where facility location, inventory policy and pricing decisions are considered simultaneously. It means that the location of C–D centers and disassembly centers, the assignment of the C–D centers to the suppliers and disassembly centers, the assignment of the disassembly centers to the suppliers and the assignment of customer regions to the C–D centers are determined. Moreover, the price of a new STB, the encouragement cost of a collected STB type I and the encouragement cost of a collected STB type II. It should be noted that, stochastic replenishment lead time from suppliers to C–D centers has been added in this model that makes it more reliable. In addition, correlated demand among the customer regions has been considered, which is demonstrated by correlation coefficient. Considering the shortage in the C–D centers and combining the lost sales and backorders are the other assumptions that in the literature have not been studied. Hence, in this paper an optimization model that includes all of the above mentioned considerations has been proposed.
The rest of the paper is organized as follows: Section 2 reviews the related literature. In Section 3 the problem is clarified and a mathematical model is presented. Section 4 presents the proposed algorithms to solve the model. The case study is presented in Section 5. Computational results and sensitivity analysis are given in Section 6. Finally, the conclusion and future recommendations are provided in Section 7.
Section snippets
Literature review
In this section some of the relevant studies about the scope of this research are reviewed. Considering forward and reverse logistics simultaneously have been studied by many authors. Lu and Bostel [17] proposed a location model where the forward and reverse flows were considered simultaneously and for solving this model they applied a Lagrangian based algorithm method and clarified some ways of improving the lower bound of the problem. Easwaran and Üster [18] presented a mixed integer linear
Problem definition
This section presents the formulation of the ICT closed loop supply chain model in which the demand of customers is correlated among the regions. The network includes supplier, C–D center, disassembly center and customer region. The STBs, which are bought by suppliers form producers, can sell in this ICT supply chain. The new STBs are transported from the suppliers to the C–D centers for selling to the customers. In the C–D centers the STBs (new or collected) are stocked and the inventory is
Solving methodologies
Although the mentioned problem can be solved by the GAMS software using BARON solver, the performance of GAMS is not applicable when the size of problem (the number of suppliers, C–D centers, disassembly centers and customer regions in this model) increases. Therefore, due to the NP-hard nature of the problem [48], [49], the meta-heuristic algorithms are applied. Two meta-heuristic algorithms are utilized in this paper namely ICA and GA. One of the population based meta-heuristic algorithm
Case study
The presented model in this research is implemented in a real ICT case in Iran. The company, which is chosen for studying this model, is Fanava. This company is a fixed communication providers (FCP) company and provides services such as ADSL service, virtual private network (VPN) service, broadband service and data center service. This company is planning for presenting IPTV service to its customers.
Two provinces of Iran named Guilan and Mazandaran are selected for presenting the IPTV service
Computational results and sensitivity analysis
The mentioned algorithms are coded in MATLAB R2009a. In addition, the model is coded in GAMS for the small size instances. The presented algorithms are performed on a 2.13 GHz Intel Core i3 processor notebook with 4 GB of RAM memory. The results of this case study are provided in Table 9 and the graphical solution is demonstrated in Fig. 7.
According to the obtained results, one of the suppliers, which its name is Iseema is selected. Both of C–D centers, which are Guilan C–D center and
Conclusion and recommendation for future work
In this paper a mixed integer nonlinear programming model was formulated, in order to gain the maximized profit in an ICT closed loop network, which combined the forward and reverse logistics. In this research STB was the examined product, which is an ICT device for receiving IPTV service in ICT industry. In the reverse logistic, some of the returned STBs according to their quality were remanufactured, which were denoted as the returned STB type I and the rest were disassembled, which were
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No author associated with this paper has disclosed any potential or pertinent conflicts which may be perceived to have impending conflict with this work. For full disclosure statements refer to https://doi.org/10.1016/j.knosys.2019.05.003.