European Journal of Operational Research 179 (2007) 1063 1077

www.elsevier.c om/lo
cate/ejor
An optimization moel for the esi!n of a capacitate multi"prouct re#erse
lo!istics net$or% $ith uncertaint&
'aria (sa)el *omes +alema
a,-
, Ana .aula /ar)osa".o#oa
)
, Au!usto 01 2o#ais
c
a
3entro e 'atema4 tica e Aplicac5 oes, 637, 829, 'onte e
3aparica, 2:2;"11< 3aparica, .ortu!al
)
3entro e Estuos e *estao, (+7, A#1 Ro#isco .ais, 10<9"101 9is)oa, .ortu!al
c
=ep1 e 'oelac5 ao e +imulac5 a o, (2E7(, Est1 o .ac5 o o 9umiar, 16<9"03: 9is)oa, .ortu!al
Recei#e 1; =ecem)er 2003>
accepte 1; 'a& 200;
A#aila)le online 2< 'arch 2006
Abstract
(n this $or% the esi!n of a re#erse istri)ution net$or% is stuie1 'ost of the propose
moels on the su)?ect are case )ase an, for that reason, the& lac% !eneralit&1 (n this paper $e
tr& to o#ercome this limitation an a !eneralize moel is propose1 (t contemplates the esi!n
of a !eneric re#erse lo!istics net$or% $here capacit& limits, multi"prouct mana!e" ment an
uncertaint& on prouct emans an returns are consiere1 A mi@e inte!er formulation is
e#elope $hich is sol#e usin! stanar /A/ techniBues1 7he moel is applie to an
illustrati#e case1
2006 Elsevier B.V. All rights reserved.
Ce&$orsD Re#erse lo!istics> Optimization moel> 8ncertaint&
1. Introduction
One of the Erst eEnitions of re#erse lo!istics $as pro#ie )& +toc% (1992)D .. . the term
often use to the role of lo!istics in rec&clin!, $aste isposal an mana!ement of hazarous
materials> a )roaer perspecti#e inclues all issues relatin! to lo!istics acti#ities carrie out
in source reuction, rec&clin!, su)stitution, reuse of materials an isposal 1
9ater, 6leischmann (2001) proposes a ne$ eEnitionD re#erse lo!istics is the process of
plannin!, imple" mentin! an controllin! the eEcient, eEecti#e in)oun Eo$ an stora!e of
seconar& !oos an relate infor" mation opposite to the traitional suppl& chain irections
for the purpose of reco#erin! #alue an proper isposal 1 (n this eEnition proucts o not
ha#e to return to the ori!in1 7he author uses a )roa concept of seconar& proucts, $hich
inclues non"use proucts1 Fhen referrin! to in)oun Eo$ (.. .) opposite to the traitional
suppl& chain irections, 6leischmann lea#es out from this eEnition the reuse of or!anic $aste1
-
3orresponin! author1
E"mail aressD isa)el1salemaGineti1pt ('1(1*1 +alema)1
0!!"221!/# " see $ront matter 2006 Elsevier
B.V. All rights reserved.
doi%10.1016/j.ejor.200&.0&.02
'1(1*1 +alema et al1 H European Journal of Operational Research 179 (2007) 1063 1077

(n the operations research perspecti#e, the re#erse lo!istics chain can )e i#ie into three
ma?or areasD is" tri)ution, prouction plannin! an in#entor&1
(n the istri)ution area, one of the Erst $or%s pu)lishe $as )& *ottin!er (19::)1 +ince then
se#eral moels ha#e )een propose $hich focus on such aspects as prouct rec&clin! an
plannin!Histri)ution1 +ome rele" #ant an important $or%s concernin! prouct rec&clin!,
incluin! close loop chains, are 3aruso et al1 (1993), Croon an Iri?ens (199;), /arros et al1
(199:), 9istes an =e%%er (2001), *ianni%os (199:), Ja&araman et al1 (1999) an 6leischmann
et al1 (2001)1 Fith the e@ception of this last $or%, all others are case epenent, $hich ma%es
them iEcult to appl& to a #ariet& of cases1
On the matter of plannin!, the $or%s of Ammons et al1 (1997), +pen!ler et al1 (1997) an
Cri%%e et al1 (2001) simultaneousl& hanle istri)ution an prouction plannin!1 (n aition
Ieera%amolmal an *upta (2000), +ohi an Reimer (2001) an Ioi!t (2001) e@plore
aspects of prouction plannin! $hen prouct reco#er& is consiere1
6rom the a)o#e mentione $or%s the most !eneric moel for the esi!n of re#erse lo!istic net$or%s is the
one propose )& 6leischmann et al1 (2001) (reco#er& net$or% moel R2')1 (t consiers the for$ar Eo$
to!ether $ith the re#erse Eo$, allo$in! the simultaneous eEnition of the optimal istri)ution an reco#er&
net$or%s1 A '(9. formulation is propose that constitutes an e@tension of the traitional $arehouse location
pro)lem $here t$o such moels are inte!rateD one for the for$ar chain connectin! factories to customers
throu!h $arehouses, an the other for the re#erse chain connectin! customers to factories, throu!h isassem"
)l& centres1 7he t$o chains are inte!rate )& means of a )alance constraint that assures, for each factor&, that
its total return is not !reater than its total prouction1 7$o pre#iousl& pu)lishe case stuies $ere use to test
the moel an a stu& on the )eneEt of inte!ratin! )oth chains $as performe1
Fhile the R2' appears Buite !eneral it still oes not ta%e into account three important characteristics of
real pro)lems, such as prouctionHstora!e capacit& limits, multi"prouct prouction an uncertaint& in
emanHreturn Eo$s1
(n this $or%, $e tr& to o#ercome these ra$)ac%s )& presentin! a ne$ moel $hich contemplates )oth is"
tri)ution an plannin! aspects in the conte@t of a re#erse lo!istics net$or%, an $hich allo$s for a multi"pro"
uct en#ironment $ith limite capacities an uncertaint& in the eman an return Eo$s1 A '(9. formulation
moel is propose that e@tens the R2' moel an allo$s easier application to real life pro)lems, $ithout a
loss in !eneralit&1 As each ne$ moel characteristic is ae, $e sol#e the moel for an ()erian compan& case
stu& an present the results1
7his paper is structure as follo$s1 (n the ne@t section, the pro)lem is escri)e in etail1 +ection 3
escri)es the ()erian case stu&1 +ection < presents the mathematical formulation of the moel, $ith each
choice of constraint )ein! illustrate $ith the ()erian case stu&1 7he paper conclues $ith some Enal remar%s
an a iscussion of future research1
2. 'roblem descri(tion
A re#erse lo!istics net$or% esta)lishes a relationship )et$een the mar%et that releases use
proucts an the mar%et for ne$ proucts1 Fhen these t$o mar%ets coincie, $e tal% of a
close loop net$or%, other$ise of an open loop1
7he re#erse lo!istics istri)ution pro)lem is face )& inustries that $ant to reco#er their
en"of"life pro" ucts or are in the rec&clin! )usiness, $here use proucts are collecte an
partl& incorporate into ne$ proucts1
6leischmann et al1 (2001) eEne this pro)lem as follo$sD
*i#en
)
customers eman an return,
)
minimal isposal fraction,
)
unit costs of eman an return,
)
unit cost of isposal,
)
penalt& costs for non"satisEe eman an return,
)
E@e costs for openHuse factories, $arehouses an istri)ution centres,
'1(1*1 +alema et al1 H European Journal of Operational Research 179 (2007) 1063 1077
*
=etermine
)
the istri)ution an reco#er& net$or%s,
+o as to
)
minimize total cost1
. +ase 1% Iberian com(an,
7o test the R2' moel, a case of an oEce ocument compan& that operates in the
()erian mar%et is sol#e1 (n aition to ne$ proucts that are release an supplie to
customers, the compan& is also con" sierin! remanufacturin! some of its proucts collecte
after en use1 7he prouction an remanufactur" in! ta%e place in factories, $hich suppl&
customers throu!h a set of $arehouses1 7he collection of use proucts from customers is
irecte to a set of isassem)l& centres that in turn suppl& factories1 7his reco#er polic&
reBuires consiera)le foresi!ht on the aeBuac& of the istri)utionHreco#er& net$or%
structure1
As a Erst case, a sin!le prouct net$or% $ill )e create1 7he mana!er )oar reBueste a
stu& on the )est prouction location for this ne$ prouct1 6i#e iEerent sites $ere proposeD
+e#ille (factor& 1), +alamanca (factor& 2), +ara!ossa (factor& 3), Iiseu (factor& <) an
'ari (factor& ;)1 (n aition, ei!ht possi)le loca" tions $ere propose for $arehouses
an E#e for isassem)l& centres1
6ifteen clusters of customers locate in the same re!ion $ere consiere (for simplicit&, these
$ill )e simpl& referre to as customers)1 Althou!h this ma& seem to )e a small num)er, $e
stress that this is a strate!ic moel1 (t is not intene to create a etaile net$or%, )ut
rather to esta)lish the ma?or connections )et$een customers clusters an iEerent potential
locations for facilities, $ithin a strate!ic en#ironment1
All the necessar& ata $ere supplie )& the compan&, )ut since this is treate as conEential,
the ata use in all cases $ere ranoml& !enerate, follo$in! iEerent uniform istri)utions,
as sho$n in 7a)le 11 2ote that, for the re#erse chain, the non"satisEe return correspons
to the amount of the en use proucts that $as not collecte )& isassem)l& centres1 7his
amount is eBui#alent to the non"satisEe eman in the for" $ar chain1
7he solution of the moel resulte in the net$or% sho$n in 6i!1 11
7he solution sho$s that the factories locate in Iiseu, 'ari an +e#ille $ere opene to ser#e E#e $are"
houses an four isassem)l& centres, so as to satisf& all customers eman an return1 2ote that some cus"
tomers are supplie )& the factor& that recei#es their returns, $hile others are supplie )& a iEerent one1 E#en
7a)le 1
()erian case parameters, )ase in 6leischmann et al1 (2001)
=escription .arameter Ialues (m1u1Hu1)
6actor& E@e cost f
p

8nifJ32 000, ;; 000K Farehouse E@e cost f
$
8nifJ:000, 12 000K =isassem)l& centre E@e cost f
r
8nifJ;0 000, 72 000K
7ransportation cost )& istance an prouct
6actor& $arehouse c
p$
2
Farehouse costumer c
$c
7
3ostumer isassem)l& centre c
cr
;
=eman

8nifJ7000, 20
000K
Return r

8nifJ;000, 13
000K
=isassem)l& centre factor& c
rp
<
2ot satisEe eman cost c
u

8nifJ6000, 12 000K 2ot satisEe return cost c
$
8nifJ;000, :000K
'oel coeEcients c
$
m-li
mij-
. c
(w
t
ij
/ c
wc
t
?%
0
c
r
'1(1*1 +alema et al1 H European Journal of Operational Research 179 (2007) 1063 1077
&
. c
cr
t
-l
/ c
r(
t
li
$here t
a
)
is the istance )et$een a an )
6i!1 11 ()erian case net$or% case 11
7a)le 2
()erian case computational results
'oel 7otal #aria)les /inar& #aria)les 2um)er of constraints 2um)er of 9. s 3.8s (secon) Optimal #alue (10
3
m1u1)
R2' 1099 1: 3:1 131 01062 11 00<
thou!h this seems li%e a mi@e openHclose loop situation, $e are, in fact, in the presence of
a close loop net$or%, since all factories )elon! to the same compan&1
7he computational results are sho$n in 7a)le 21 7his an all #alues reporte $ere o)taine on a .entium
(I 3106; *Lz machine, runnin! Fino$s M. .rofessional, usin! the commercial sol#er *A'+H3.9EM
:111
*. 1odel mathematical $ormulation
As escri)e a)o#e, the R2' moel (6leischmann et al1, 2001), althou!h Buite !eneral,
oes not consier important aspects of actual lo!istics net$or%s such as capacit& limits, multi"
prouct Eo$s an uncertaint&1
(n this $or%, $e ha#e e@tene the propose moel to account for each of these aspects1
6irst, the formu" lation of the reco#er& istri)ution net$or% moel $ith capacit& constraints
$ill )e !i#en1 7hen the ne$ moel $ill )e moiEe to account for se#eral proucts an Enall&
uncertaint& $ill )e ae1 (n each section an e@am" ple )ase on the moti#atin! case (+ection
3) $ill )e presente1
<111 Reco#er& istri)ution net$or% moel $ith capacit& constraints
Fhen esta)lishin! a istri)ution net$or%, mana!ers ha#e to ta%e into account that facilities
cannot process an unlimite #olume of proucts1 7heir capacities can )e limite for a #ariet&
of reasons such as shorta!e of space, machiner& an staE1 3apacit& limits must therefore )e
consiere in the moellin! of factor& prouc" tion, $arehouses stora!e an isassem)l&
centres1 'a@imum an minimum )ouns are consiere in orer to account for operational
an ph&sical restrictions1
/ase on the pro)lem escription !i#en in +ection 2, the reco#er& istri)ution net$or% moel
$ith capacit& constraints in#ol#es the follo$in! sets, parameters an #aria)lesD
+ets
( N O1,
...
, 2
p
P potential factories,
(
0
N (
2
O0P potential factories plus a isposal option,
J N O1,
...
, 2
$
P potential $arehouses,
C N O1,
...
, 2
c
P potential customers,
9 N O1,
...
, 2
r
P potential isassem)l& centres1
.arameters

%
customer % eman in the reuse mar%et, %
2
C,
r
%
customer % return of use proucts, %
2
C,
c
$
c
minimal isposal fraction,
ij-
unit #aria)le cost of eman ser#e )& factor& i, throu!h $arehouse ?, to customer % (ma& inclue trans"
c
r
portation, prouction costs,
.. .
) i
2
(, ?
2
J, %
2
C,
-li
unit #aria)le cost of customer % return, mae trou!h isassem)l& centre l, to factor& i (ma& inclue
c
r
transportation costs, reprocessin! costs,
.. .
) %
2
C, l
2
9, i
2
(,
c
u
-l
0
unit #aria)le cost of customer % return isposal, mae throu!h $arehouse l, %
2
C, l
2
9,
c
w
-
unit #aria)le cost of customer % non"satisEe eman, %
2
C,
$
(
-
unit #aria)le cost of customer % non"satisEe return, %
2
C,
$
w
i
E@e cost of openin! factor& i, i
2
(,
$
r
j
E@e cost of openin! $arehouse ?, ?
2
J,
g
(
l
E@e cost of openin! isassem)l& centre l, l
2
9,
g
w
i
ma@imum capacit& of factor& i, i
2
(,
g
r
j
ma@imum capacit& of $arehouse ?, ?
2
J,
t
(
l
ma@imum capacit& of isassem)l& centre l, l
2
9,
t
w
i
minimum capacit& of factor& i, i
2
(,
t
r
j
minimum capacit& of $arehouse ?, ?
2
J,
l
minimum capacit& of isassem)l& centre l, l
2
91
3
$
Iaria)les
3
r
ij-
eman fraction ser#e )& factor& i, throu!h $arehouse ?, to customer %, i
2
(, ?
2
J, %
2
C for$ar E
o$,
-li
return fraction of customer %, throu!h isassem)l& centre l, to factor& i, %
2
C, l
2
9, i
2
(
0
return Eo$,
8
%
non"satisEe eman fraction of customer %, %
2
C,
4
(
F
%
non"satisEe return fraction of customer %, %
2
C,
4
w
i
.
1 if factor& i is opene, i
2
(,
4
r
j
.
1 if $arehouse ? is opene, ?
2
J,
l
.
1 if isassem)l& centre l is opene, l
2
91
8sin! the a)o#e eEnitions, the moel is formulate as follo$sD
'in
3
$
(
4
(
/
3
$
w
4
w
/
3
$
r
4
r
/
3 3
3
c
$
d
-
3
$
3 3 3
/ r
-
3
r
i i
j
j
j2
l l
-
5
i2I
j
2
6
-2
7
ij
-
ij
-
-2
7
l2
5
c
r
i2
I
0
-
li
-li
-
/
3
c
u
d
-
8
-
/
3
c
w
r
-
9
-
:1;
7
ij-
s1t1
3 3
3
$
-2
/ 8
-
. 10 <- 2 7 0
:2;
i2I
3
j26
ij-
=
3
3
r r
l25
i
2
I
-li
/ 3
-l0
/ 9
-
.
1
0 <- 2 7 0 :
3
;
-li
6
3 3
r
-
3
r
3 3
d
-
3
$
0 <i 2 I 0
:<;
-27 l
2
5
j
2
6
-27
c 3
6 3
3
r
-li
r
-l
0
0 <l 2 50 - 2 7 0 :
;
;
i2I
3 3
d
-
3
$ ( (
-27
j
2
6
ij-
6 g
i
4
i
0 <i 2 I 0 :
6
;
3 3
d
-
3
$ ( (
-27
j
2
6
ij-
' t
i
4
i
0 <i 2 I 0 :
7
;
3 3
d
-
3
$ w w
i2I
-2
7
ij-
6 g
j
4
j
0 <j 2 6 0 :
:
;
3 3
d
-
3
$
' t
w
4
w
0 <j 2 6 0 :
9
;
i2I
-2
7
ij- j j
3 3
r
-
3
r
6 g
r
4
r
0 <l 2 50 :
10
;
i2I
0
-2
7
-li l l
3 3
r
-
3
r r r
i2I
0
-2
7
-li
' t
l
4
l
0 <l 2 50 :
11
;
0
6 3
$
0 3 r
0 8
-
0 9
-
6
1
0 4
(
0 4
w
0 4
r
2 $
0
0
1
g
1
:
12
;
ij- -
li
i
j l
As this moel is )uilt on the one propose )& 6leischmann et al1 (2001), it minimizes costs,
EB1 (1), $ith the Erst three terms representin! respecti#el& the cost of openin! factories (i),
$arehouses ($) an isassem)l& cen" tres (l)1 7he fourth term represents the cost of satisf&in!
emans, $hile the Efth term is relate to the reco#er& of the en"of"life materials1 6inall&, the
last t$o terms are relate respecti#el& to the non"satisfaction of e" man an of return1
3onstraint (2) assures that the eman for all customers is ta%en into account, either )&
)ein! supplie (Erst term of the eBuation) or )& )ein! allocate to the non"satisEe eman
#aria)le (sec" on term)1 (n terms of customers return the same approach is aopte in EB1
(3), $hile the iEerence in the Erst term is ue to the possi)ilit& that the customers return ma&
uner!o isposal1 +peciEcall&, this eBuation consiers three iEerent return fractionsD to
factor&, to isposal an non"satisEe1 3onstraint (<) assures the moel )alance, in that, for
each factor&, the return #olume cannot e@cee the eman #olume1 3onstraint (;) moels a
minimum isposal fraction1 EBs1 (6) (11) are the capacit& constraints, $hich ma%e reunant
the usual facilities open constraints1 Each pair of constraints correspons to a iEerent %in
of facilit&D (6) an (7) esta)lish ma@imum an minimum limits for factories> (:) an (9) for
$arehouses an (10) an (11) for is" assem)l& centres1
-
-
As sho$n )& 6leischmann et al1 (2001), this moel incorporates some of the uniBue
characteristics of the re#erse chain1 /oth open an close loop net$or%s can )e consiere, as
$ell as the return of proucts (this latter )ein! ictate either )& mar%et forces or )&
le!islation)1 7o moel open or close loop net$or%s, param" eters
%
an r
%
are emplo&e1
6or
%
r
%
Q 0, i1e1 )oth parameters positi#e, a close loop suppl& chain is mo" elle, $hile for

%
r
%
N 0 the suppl& chain operates in an open loop1 (n terms of return, the choice of a hi!h
#alue for the penalt& cost c
u
, $hich implies lo$ #alues for F
%
, reEects le!islation
enforcement> con#ersel&, the choice of a lo$ c
u
reEects mar%et a$areness for
rec&clin!Hremanufacture alternati#es1
.lease note that the mar%et for remanufacture proucts ma& iEer from the mar%et of ne$
proucts, thus for some customers %,
%
N 01
3ase 2D 7o anal&se the eEect of these ne$ constraints, the moti#atin! case $as enlar!e so as
to encompass capacit& limits impose on all facilities1 7hese #alues are sho$n in 7a)le 31
7a)le < an 6i!1 2 sho$ the results from sol#in! the ne$ case1
7a)le 3
6acilit& capacit& limits for case 2
+ite 'inimum capacit& 'a@imum capacit&
6actories ;0 000 70
Farehouses 20 000 ;0
=isassem)l& centres 20 000 <0
000
7a)le <
3apacit& constraint moel computational resultsD case 2
'oel 2um)er of constraints 2um)er of 9. s 3.8s (secon) Optimal #alue (10
3
m1u1)
3apacit& 1<7 207 0107: 11 11;
6i!1 21 3ase 2 net$or%1
(n computational terms one shoul notice that the num)er of constraints has ecrease
su)stantiall& (1<7 as compare to 3:1)1 7he main reason is that the ne$ capacit& constraints
are smaller in num)er than the usual open constraints for facilities, $hich $ere mae
reunant, as state a)o#e1 7he 3.8 time o)taine $hen compare to case 1 $as of the
same orer of ma!nitue (0107: a!ainst 01062)1
(n terms of the net$or%, it can )e seen that these capacit& constraints resulte in the
openin! of one ai" tional $arehouse1 7he factories an isassem)l& centres remain the same
as in 6i!1 11 Lo$e#er, some custom" ers are no$ ser#e )& iEerent facilities1 One ma&
conclue that prouctionHstora!e limitations o impact the esi!n of the optimal istri)ution
net$or%1
<121 'ulti"prouct formulation
Another restriction in the R2' moel is that it consiers onl& a sin!le prouct1 +ince
this situation is unu" sual in a real istri)ution net$or%, $e propose a ne$ formulation that
allo$s for multiple proucts1
3onsier a set ' N O1, ... , 2
#
P for the e@istin! proucts1 Almost all #aria)les an
parameters $ill )e from
ij-
mij-
no$ on prouct epenent1 6or instance,
3
$
is no$ replace )&
3
$
$hich is eEne as the eman fraction
of prouct m ser#e )& factor& i, throu!h $arehouse ?, to customer %1 3onstraints (2) (;) , $hich remaine
unchan!e $hen capacit& constraints $ere introuce, are no$ !eneralize to account for the multi"prouct
3 3
3
$
situationD
mij-
/ 8
m-
.
1
0 <m 2 1 0 - 2 7 0 :
13
;
i2I
3
j26 =
3
3
r r
l25
i2I m-li
/ 3
m-l0
/ 9
m-
.
1
0 <m 2 1 0 - 2 7 0 :
1<
;
m-li
6
3 3
r
m-
3
r
3 3 d
m-
3
$
0 <m 2 1 0 i 2 I 0 :
1;
;
-27 l2
5
j
2
6
-27
c 3
6 3
3
r
m-li
mij-
r
m-
l0
0 <m 2 1 0 l 2 50 - 2 7
1
:
16
;
i2I
3onstraints (6) (11) , $hich impose limits to facilit& capacities, $ill )e replace )&
constraints that $ill limit the total capacit& of facilities1 7hese limits refer to the total
processin!H$arehousin! of all proucts that run throu!h the net$or%1
As an e@ample, the chan!es in factor& capacit& constraints are presente1 3han!es are similar for the
remainin! constraints1 3onstraints (6) an (7) are no$ re$ritten as follo$sD
3 3 3
d
m-
3
$ ( (
m21
-27
j
2
6
mij-
6 g
i
4
i
0 <i 2 I 0 :
17
;
3 3 3
d
m-
3
$ ( (
m21
-27
j
2
6
mij-
' t
i
4
i
0 <i 2 I
1
:
1:
;
6urthermore, $e can easil& account for the possi)ilit& of limitin! the prouction of each prouctD
3 3
d
m-
3
$ ( (
-27
j
2
6
mij-
6 gmi4
i
0 <m 2 1 0 i 2 I 0 :
19
;
3 3
d
m-
3
$
' t
(
4
(
0 <m 2 1 0 i 2 I 0 :
20
;
-27
m
i
j
2
6
mi
j-
mi
i
mi
$here
g
(
an
t
(
are, respecti#el&, the ma@imum an minimum prouction limits of prouct m for factor& i1
3ase 3D 3ase 2 is no$ implemente for t$o proucts1 .rouct one has the same ata use in the pre#ious
cases, $hile the characteristics of prouct t$o are presente in 7a)le ;1
7a)le 6 !i#es the results for 3ase 31 Althou!h the num)er of constraints an #aria)les has increase (2;9 as
compare to 1<7), the 3.8 times i not eteriorate si!niEcantl& (011;6 as compare to 0107: secons)1
+ince t$o iEerent proucts are consiere, the Enal structure is associate $ith t$o iEerent istri)ution
net$or%s (6i!1 3)1 2ote that the !lo)al net$or% structure is more intricate not onl& as a result of the t$o pro"
ucts, )ut also )ecause of the introuction of capacit& constraints1
9oo%in! separatel& at each istri)ution net$or%, $e see that all customers emans an returns $ere sat"
isEe for prouct 11 7his result $as achie#e throu!h the use of more than one factor&H$arehouse or isas"
sem)l& centreHfactor&1 (n contrast, onl& a sin!le factor&H$arehouse an isassem)l& centreHfactor& $ere use
in case 2 (6i!1 2)1
7a)le ;
.rouct 2 parametersD case 3
=escription .arameter Ialues
(m1u1)
7ransportation cost )& istance an prouct
6actor& $arehouse c
p$
<
Farehouse costumer c
$c
:
3ostumer isassem)l& centre c
cr
6
=eman

8nifJ;000, 1;
000K
Return r

8nifJ3000,
:000K
=isassem)l& centre factor& c
rp
2
2ot satisEe eman cost c
u

8nifJ6000, 12 000K 2ot satisEe return cost c
$
8nifJ;000, :000K
'oel coeEcients c
$
-li
ij-
. c
(w
t
ij
/ c
wc
t
?%
0
c
r
. c
cr
t
-l
/ c
r(
t
li
$here t
a
)
is the istance )et$een a an )
'1(1*1 +alema et al1 H European Journal of Operational Research 179 (2007) 1063 1077
1&
7a)le 6
3ase 3 computational results 'o
el
7otal
#aria)les
/inar&
#aria)les
2um)er of
constraints
2um)er of
9. s
3.8s
(secons)
Optimal #alue (10
3
m1u1)
'ulti 2179 1: 2;9 <<< 011;6 20 <20
6i!1 31 3ase 3 net$or%s for prouct 1 an 2, respecti#el&1
Fith re!ar to prouct 2, a!ain all customers emans an returns $ere satisEe1 (n 6i!1 3
it seems that one isassem)l& centre $as opene ?ust to collect one customer s return sent
totall& for isposal ()ecause there is no lin% )et$een that centre an the factor& locate in
+alamanca)1 Lo$e#er in the net$or% for prouct 1, the same isassem)l& centre ser#es three
more customers an sens the returne proucts to the factor& locate in 'ari1
(t is important to note that the !lo)al structure is o)taine for the t$o proucts an the
istri)ution is mae simultaneousl& for )oth proucts1
<131 8ncertaint&
9iterature sho$s that one of the ma?or pro)lems in the re#erse lo!istic chains is the
uncertaint& associate $ith eman an return1 Lence, this pro)lem shoul )e aresse $hen
tr&in! to moel such s&stems1 (n this paper $e emplo& a scenario")ase approach to moel
such conitions1
<13111 8ncertaint& approach
9et
>
)e the set of all possi)le scenarios an
h 2 >
a particular scenario1 Also, let all )inar& #aria)les )e
inclue in #ector & an all the continuous #aria)les in #ector @1 9et f )e the #ector of the E@e costs relate to
the openin! of the facilities an c the #ector containin! the remainin! coeEcients in the o)?ecti#e function1
6or a particular scenario
h
, the concise moel can )e state as follo$sD
min
$, / c
h
?
A
h
? 6 a
h
0
B
h
? 6 +,0
, 2 $
0
0
1
g0 ? '
0
0
$here A
h
, /
h
an 3 are matrices an a
h
is a #ector1
'1(1*1 +alema et al1 H European Journal of Operational Research 179 (2007) 1063 1077
16
7a)le 6
3onsier (
h
to )e the pro)a)ilit& of scenario h1 +ince $e onl& $ish to moel a Enite
num)er of iscrete scenarios, the e@pecte #alue function )ecomes an orinar& sum1 7he
uncertaint& moel is then !i#en )& the follo$in! mi@e inte!er formulationD
min
$, / 3 (
h
c
h
?
h
h
A
h
?
h
6 a
h
0 B
h
?
h
6
+,0
, 2 $
0
0
1
g0 ?
h
'
01
2ote that the o)taine solution for this moel is not optimal for ini#iual scenarios, )ut it
!i#es the net$or% struc" ture for the $orst possi)le scenario1 6or further etails, please refer
to the $or% of /ir!e an 9ou#eau@ (1997)1
<13121 =etaile moel
Assumin! that onl& customers eman an return are scenario"epenent, the remainin! parameters ha#e
the same #alues in the three scenarios1 7his inclues the )inar& #aria)les, $hich translate the conition of
$hether or not facilities are opene1 As a conseBuence, onl& the continuous #aria)les $ill #ar& $ith the
scenario1
/ase on the uncertaint& approach escri)e a)o#e, the capacitate multi"prouct re#erse net$or% moel
can )e eEne as follo$sD
+ets
(n aition to the sets escri)e in +ection <11, $e a
' N O1,
...
, 2
#
P e@istin! proucts,
+ N O1,
.. .
, 2
s
P potential scenarios1
.arameters
7he same parameters eEne in +ection <11 $ill )e emplo&e1 Lo$e#er some $ill reBuire
!eneralization for prouct m an scenario s, an a scenario pro)a)ilit& nees to )e ae,
as follo$sD

m%s
eman of prouct m, of customer % in the reuse mar%et, for scenario s, m
2
', %
2
C, s
2
+,
c
$
r
m%s
return of use prouct m, of customer %, for scenario s, m
2
', %
2
C, s
2
+,
mij-
unit #aria)le cost of eman of prouct m, ser#e )& factor& i, throu!h $arehouse ?, to customer %
c
r
(ma& inclue transportation, prouction costs,
.. .
) m
2
', i
2
(, ?
2
J, %
2
C,
m-li
unit #aria)le cost of prouct m return )& customer %, throu!h isassem)l& centre l, to factor& i (ma&
c
r
inclue transportation costs, reprocessin! costs,
.. .
), m
2
', %
2
C, l
2
9, i
2
(,
m-l
0
unit #aria)le cost of prouct m isposal collecte in customer %, throu!h isassem)l& centre l, m
2
',
c
u
%
2
C, l
2
9,
c
w
m-
unit #aria)le cost for non"satisEe eman of prouct m for customer %, m
2
', %
2
C,
m-
unit #aria)le cost for non"satisEe return of prouct m, of customer %, m
2
', %
2
C,
(s
pro)a)ilit& of scenario s, s
2
+1
Iaria)les
'1(1*1 +alema et al1 H European Journal of Operational Research 179 (2007) 1063 1077
1!
7a)le 6
3
$
+imilar to parameters, some #aria)les use in +ection <11 $ill )e moiEe, as follo$sD
mij-s
eman fraction of prouct m, ser#e )& factor& i, throu!h $arehouse ?, to customer %, in scenario s,
3
r
m
2
', i
2
(, ?
2
J, %
2
C, s
2
+ for$ar Eo$,
m-lis
return fraction of prouct m, mae )& customer %, throu!h isassem)l& centre l, to factor& i, in sce"
nario s, m
2
', %
2
C, l
2
9, i
2
(
0
, s
2
+ re#erse Eo$,
8
m%s
non"satisEe eman fraction of prouct m, of customer %, in scenario s, m
2
', %
2
C, s
2
+,
F
m%s
non"satisEe return fraction of prouct m of customer %, in scenario s, m
2
', %
2
C, s
2
+1
'1(1*1 +alema et al1 H European Journal of Operational Research 179 (2007) 1063 1077
1<
1<
'1(1*1 +alema et al1 H European Journal of Operational Research 179 (2007) 1063 1077
6ormulation
'in
3 3 3 3 3
(
s
c
$
$
3 3 3 3 3
r r
m21
i
2
I
j
2
6
-2
7
m
-
s
2
@
mij-
d
m-s
3
mij-s
/
m21
-27
m
-
l2
5
i2
I
0
s
2
@
(
s
c
m-li
r
m-s
3
m-lis
3 3
3
/
(
s
c
u
d
m-s
8
m-s
/
3 3
3
(
s
c
w
r
m-s
9
m-s
m21 -27
3
s2@
3
m21
-27
3
s2@
/ $
(
4
(
/ $
w
4
w
/
$
r
4
r :
21
;
i i
j
j
j26
l l
l25
s1t1
3
3 3
$
mij-s
/ 8
m-s
.
1
0 <m 2 1 0 - 2 7 0 s 2 @ :
22
;
i2I
3
j26 =
3
3
r
m-lis
/ 3
m-l0s
/ 9
m-s
. 10 <m 2 1 0 - 2 7 0 s 2 @
:23;
l25
i2I
3 3
r
m-s
3
r
d
m-s
3
$
6 3
m-lis
6 3 3
mij-s
0 <m 2 1 0 i 2 I 0 s 2 @ :
2<
;
-27 l
2
5
j
2
6
-27
c 3
3
r
m-lis
r
m
-l0
0 <m 2 1 0 l 2 50 - 2 7 0 s 2 @ :
2;
;
i2I 3 3 3
d
m-s
3
$ ( (
m21
-27
j
2
6
mij-s
6 g
i
4
i
0 <i 2 I 0 s 2 @ :
26
;
3 3 3
d
m-s
3
$ ( (
m21
-27
j
2
6
mij-s
' t
i
4
i
0 <i 2 I 0 s 2 @ :
27
;
3 3 3
d
m-s
3
$ w w
'1(1*1 +alema et al1 H European Journal of Operational Research 179 (2007) 1063 1077
1A
m21 i
2
I
-2
7
mij-s
6 g
j
4
j
0 <j 2 6 0 s 2 @ :
2:
;
3 3 3
d
m-s
3
$ w w
m21
i
2
I
-2
7
mij-s
' t
j
4
j
0 <j 2 6 0 s 2 @ :
29
;
3 3 3
r
m-s
3
r r r
m21
i2
I
0
-2
7
m-lis
6 g
l
4
l
0 <l 2 50 s 2 @ :
30
;
3 3 3
r
m-s
3
r r r
m21
i2
I
0
-2
7
m-lis
' t
l
4
l
0 <l 2 50 s 2 @ :
31
;
0
6 3
$
0 3 r
0 8
m-s
0 9
m-s
6
1
0 4
(
0 4
w
0 4
r
2 $
0
0
1
g
1
:
32
;
mij-s m-
lis
i
j l
7his moel not onl& maintains the characteristics of the moel propose )& 6leischmann et al1
(2001), $here it is possi)le to moel open or close loop suppl& chains an eman push or
pull ri#ers, )ut also allo$s the moellin! of a multi"prouct net$or% $ith capacit&
constraints1
3ase <D +ince the pre#ious net$or%s $ere esi!ne for ne$ proucts, the ata pro#ie )&
the compan& $ere )ase on estimate #alues1 3onseBuentl&, a moel accountin! for some
uncertaint& in the pro#ie ata $as ientiEe as a useful tool1 A scenario")ase moel $as
then )uilt, $hich can pro#ie the ecision ma%ers $ith an aeBuate frame$or% to
in#esti!ate iEerent patterns of prouct eman an return1
A!ain as ata are conEential, iEerent #alues $ere !enerate to run case <1 +o the pre#ious
t$o proucts $ill a!ain )e consiere, to!ether $ith capacit& constraints1 7hree scenarios
for each prouct $ill )e esta)lishe1
7he scenarios for eman an return are escri)e in 7a)le 71 7he ata from case 3 are
preser#e in sce" nario 1 for )oth proucts1 +cenario 2 of prouct 1 moels the most
pessimistic situation an scenario 3 moels an optimistic one1 6or prouct 2 similar economic
situations are also moelleD scenario 2 is optimistic $hile scenario 3 is pessimistic1
6or each scenario there is an associate pro)a)ilit& #alue (10R, 7;R an 1;R, respecti#el&)1
7he e@ample is sol#e $ith 3.9EM #ersion :11 an the results are presente in 7a)le : an
6i!s1 < an ;1
Anal&sin! the computational results, it can )e seen that, as e@pecte, the moel size increase si!niEcantl&
an the 3.8 time !re$ accorin!l&, to!ether $ith the num)er of 9. s neee to sol#e the case instance1
6i!1 < presents the #arious scenario net$or%s create for prouct 11 (t is foun that all customers are ser#e
an that 100R ser#ice, in )oth eman an return, is !uarantee1 7his is sho$n in 6i!s1 ; 7 1
7a)le 7
=eman an return scenarios for prouct 1 an 2D scenarios pro)a)ilities
.rouct +cenario =eman Return +cenario pro)a)ilit&
1 1

8nifJ7000, 20 000K

8nifJ;000, 13 000K 0110
2

8nifJ1000, 10 000K

8nifJ;00, :000K 017;
3

8nifJ1; 000, 20 000K

8nifJ;000, 1; 000K 011;
2 1

8nifJ;000, 1; 000K

8nifJ3000, :000K 0110
2

8nifJ1; 000, 2; 000K

8nifJ11 000, 6000K 017;
3

8nifJ;000, 7000K

8nifJ2000, 6000K 011;
7a)le :
3ase < computational results
'oel 7otal #aria)les /inar& #aria)les 2um)er of constraints 2um)er of 9. s 3.8s (secon) Optimal #alue (10
3
m1u1)
+cenarios 6<99 1: 769 ;19; 21171 10 :0;
6i!1 <1 3ase < net$or%s for prouct 1 in scenarios 1, 2 an 3, respecti#el&1
6i!1 ;1 3ustomers eman an return for prouct 1, in scenario 11
(n 6i!1 ;, the !raphic re#eals the fraction of customers eman an return that is ser#e
)& each factor&1 6or e@ample, in scenario 1, customer c1 has his eman for prouct 1 totall&
supplie )& the factor& locate in Iiseu (factor& <), $hile customer c1< has his eman supplie
)& three iEerent factoriesD +e#ille (factor& 1), +alamanca (factor& 2) an Iiseu (factor& <)1 (n
terms of return, customer c2 return is entirel& ispose, $hile for customer c1<, onl& 011 of
his return is ispose, a fraction sli!htl& a)o#e 017 is sent to the factor& in +ara" !ossa an
the remainin! to the factor& in Iiseu1
(t can )e note in 6i!s1 ; 7 , ho$ customer c2 has his eman iEerentl& met in all three
scenariosD in sce" nario 1 )& the factories in +alamanca an 'ari (factor& ;), in scenario
2 $holl& )& the +alamanca factor&, an in scenario 3 $holl& )& the 'ari factor&1 7he
solution foun for customer c1; is the oppositeD suppl& is !uarantee )& 'ari in all three
scenarios1 (n terms of return, the solutions foun for all the scenarios are not #er& iEerent1
7he same solution is foun for all customers, e@ception mae for customers c7, c:, c10 an
c1<, $hich ha#e their return ta%en care )& iEerent factories1
6i!1 61 3ustomers eman an return for prouct 1, in scenario 21
6i!1 71 3ustomers eman an return for prouct 1, in scenario 31
6i!1 :1 3ase < net$or%s for prouct 2 in scenarios 1 an 2, respecti#el&1
6i!1 91 3ustomers eman an return for prouct 2, in scenario 11
6i!1 101 3ustomers eman an return for prouct 2, in scenario 21
6or prouct 2, t$o net$or%s $ere o)taine, scenario 1 an 2, since for scenario 3 no
net$or% $as eeme economicall& #ia)le (6i!1 :)1
(t can )e note in 6i!1 : that not all costumers $ere ser#e1 (n scenario 1, customers c;, c7
an c1; ha#e their eman met (6i!1 9)1 (n scenario 2, the same three customers an an
aitional E#e also ha#e their eman !uarantee1 6or some, their return is collecte, $hile
for others (c2 an c1;) it is ispose (6i!1 10)1
&. +onclusions
7he num)er of scientiEc pu)lications in the Eel of re#erse lo!istics has )een steail& !ro$in!,
reEectin! the increasin! importance of this su)?ect, mainl& as a result of societ& s accrue
en#ironmental a$areness1 Lo$" e#er, ta%in! a closer loo% into the istri)ution plannin! area,
one can notice that reporte $or% is mostl& case epenent an thus !eneral moels are
missin!, in particular moels that relate re#erse an for$ar chains1
7his $or% proposes a !eneralise moel for the esi!n of re#erse lo!istics net$or%s1 7he
moel is )ase on the reco#er& net$or% moel (R2') propose )& 6leischmann et al1
(2001)1 Fhile appearin! to )e the most !eneral in the literature, the R2' still contains
some important limitations1 (n particular, it assumes unlim" ite capacit& of facilities, it eals
$ith a sin!le prouct formulation, an it oes not account for an& %in of uncertaint& (e1!1
in prouct eman an return)1 (n orer to aress these ra$)ac%s, this $or% e@tens the
R2' moel an e#elops a capacitate multi"prouct re#erse lo!istics net$or% moel $ith
uncertaint&1
7he capacit& constraints are impose on total prouctionHstora!e capacit& of the facilities,
$hich ma& )e factories, $arehouses or istri)ution centres1 Our e@pane formulation allo$s
for an& num)er of proucts, esta)lishin! a net$or% for each prouct $hile !uaranteein!
total capacities for each facilit& at a minimum cost1 6urthermore, the !eneral metho $as
stuie in the conte@t of uncertaint& in )oth prouct emans an returns, throu!h the use of
a multi"scenario approach1
7he !eneralit& of the moel $as corro)orate an #er& satisfactor& computational times
$ere o)taine1 Lo$e#er, it is important to note that as the pro)lem size increases, the
computational )uren mi!ht )e e@pecte to !ro$ accorin!l&1
=ue to this foreseen limitation, future $or% )& the authors inclues the application of
ecomposition meth" os to the moel1 7hese methos can )e !eneric as, for instance, )eners
ecomposition, or methos that $ill e@plore irectl& the pro)lem structure1
Be$erences
Ammons, J1 et al1, 19971 Re#erse prouction s&stem esi!n an operations for carpet
rec&clin!1 For%in! paper, *eor!ia (nstitute of
7echnolo!&, Atlanta, *eor!ia1
/arros, A1(1 et al1, 199:1 A t$o"le#el net$or% for rec&clin! sanD A case stu&1 European Journal of Operational Research 110, 199 21< 1
/ir!e, J1R1, 9ou#eau@, 61, 19971 (ntrouction to +tochastic .ro!rammin!1 +prin!er +eries in Operations Research1 +prin!er"Ierla!, 2e$
Sor%1
3aruso, 31 et al1, 19931 7he re!ional ur)an soli $aste mana!ement s&stemD A moellin! approach1 European Journal of Operational
Research 70, 16 301
6leischmann, '1, 20011 0uantitati#e 'oels for Re#erse 9o!istics1 9ecture 2otes in Economics an 'athematical +&stems, #ol1 ;011
+prin!er"Ierla!, /erlin1
6leischmann, '1 et al1, 20011 7he impact of prouct reco#er& on lo!istics net$or% esi!n1 .rouction an Operations 'ana!ement 10,
1;6 1731
*ianni%os, (1A1, 199:1 'ultio)?ecti#e pro!rammin! moel for locatin! treatment sites an routin! hazarous $astes1 European Journal of
Operational Research 10<, 333 3<2 1
*ottin!er, L1F1, 19::1 A computational moel for soli $aste mana!ement $ith application1 European Journal of Operational Research
3;, 3;0 36<1
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