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Issues in reverse supply chains, part II: Reverse distribution issues - an

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Issues in reverse supply chains, part II: reverse distribution issues - an

overview
P. Sasikumar a; G. Kannan b
a
Department of Production Engineering, National Institute of Technology, India b Department of Business and
Economics, University of Southern Denmark, Denmark

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 International Journal of Sustainable Engineering
Vol. 1, No. 4, December 2008, 234–249

Issues in reverse supply chains, part II: reverse distribution issues – an overview
P. Sasikumara and G. Kannanb*
a
Department of Production Engineering, National Institute of Technology, India; bDepartment of Business and Economics,
University of Southern Denmark, Denmark
(Received 23 April 2008; final version accepted 26 September 2008)

In recent years, due to growing environmental concern, there has been an increasing attention to product take-
back, product recovery and the re-distribution of end-of-life products. Reverse logistics (RL), which refers to the
distribution activities involved in product returns, has recently received much attention because many companies
are using it as a strategic tool to serve their customers; and can generate good revenue. The management of return
flow usually requires a specialised infrastructure with special information systems for tracking and dedicated
equipment for the processing of returns. An efficient reverse distribution structure may lead to a significant
return on investment as well as a significantly increased competitiveness in the market. Therefore, the time seems
to be right for a systematic overview of various issues that are arising in the context of reverse distribution. The
main purpose of this paper is to review the literature on RL and suggest a classification based on reverse
distribution issues. The result of this research provides a better understanding of the RL concept and outlines
Downloaded By: [informa internal users] At: 14:20 1 April 2009

some future directions of research on modelling and analysis.

Keywords: reverse logistics; closed loop supply chain; vehicle routing problem; decision-making; third-party
reverse logistics

Objectives and format distribution issues. Detailed discussion and the

This paper is the second of three reviews by the
authors that consider issues in reverse supply chain
management. The third and final paper, to be
published in a forthcoming issue of the Journal, will
consider the classification and simple analysis of
reverse supply chains. In addition to the environ-
mental regulation, product recovery and inventory
management issues of Part I, Sasikumar and Kannan
(2008), issues related to reverse distribution are
addressed here. The specific objectives of this paper
are:
(1) to suggest a classification of available
literature in the field of reverse distribution
issues;
(2) to identify critical issues for each
classification;
(3) to identify emerging trends in the field of
reverse distribution;
(4) to suggest directions for future researchers
in this field;
(5) as far as possible, to consolidate the
available literature on reverse distribution
issues.
The paper is organised as follows: after a brief
introduction, the details of the research methodology
are presented in Section 2. In Section 3, the existing
literature has been classified based on reverse
identification of critical issues are undertaken in
Section 4. Finally, Section 5 closes the paper by
offering conclusions and some suggestions for future
research.
1. Introduction
Reverse logistics (RL) has gained increasing interest
among researchers and practitioners of operations
and supply chain management. Possible cost reduc-
tions, more rigid environmental legislation and
increasing environmental concerns of consumers have
led to this increasing attention to RL. However, more
than 30 years ago, Ginter and Starling (1978)
anticipated that reverse channels of distribution
would become central to business activities and time
has proven them to be right. In view of this interest, a
literature review was proposed to analyse the existing
literature that has been published on reverse distribu-
tion. The existence, effectiveness and efficiency of
service management activities such as repair services
and value recovery depend heavily on effective RL
operations. Effective RL focuses on the backward
flow of materials from customer to supplier (or
alternate disposition) with the goals of maximising
value from the returned item or minimising the total
RL cost. Rogers and Tibben-Lembke (1999) define
RL as ‘the process of planning, implementing, and

*Corresponding author. Email: gov@sam.sdu.dk

ISSN 1939-7038 print/ISSN 1939-7046 online
# 2008 Taylor & Francis
DOI: 10.1080/19397030802509974
http://www.informaworld.com
 International Journal of Sustainable Engineering
controlling the efficient, cost-effective flow of raw
materials, in-process inventory, finished goods and
related information from the point of consumption to
the point of origin for the purpose of recapturing
value or proper disposal’. Tibben-Lembke and
Rogers (2002) in their examination of forward versus
RL systems identified the various costs associated
with RL and compared them to forward logistics.
Carter and Ellram (1998) pointed out the
significance of specifying a well grounded conceptual
framework for RL management. They emphasised
more on the environmental aspect of RL and defined
it as the ‘process whereby companies could become
more environmentally efficient through recycling,
reusing, and reducing the amount of materials used’.
Bloemhof-Ruwaard et al. (1999) examined distribu-
tion issues such as location of collection points in a
reverse logistic system. Fleischmann et al. (2000)
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reviewed and analysed recent case studies on logistics
network design issues in the context of recovery
networks and devised a framework of three typical
RL network structures namely RL networks for bulk
recycling, remanufacturing and reuse. Dowlatshahi
(2000) in his work defined five categories of the
literature on RL:
(1) studies wherein the authors attempted to
provide the basic concepts and a general
summary of RL (De Brito and Dekker
2002, Kopicki et al. 1993, Rogers and
Tibben-Lembke 1999, Stock 1992, 1998);
(2) scholarly works addressing quantitative
approaches (Fleischmann et al. 1997,
Fleischmann et al. 2000, Minner 2001);
(3) works dealing with more specific logistical
issues such as distribution, warehousing,
and transportation (Jahre 1995, Pohlen and
Farris 1992);
(4) examination of company profiles illustrat-
ing that some manufacturing technologies
had a critical role in the performance of RL
systems (Thierry et al. 1995);
(5) research into applications of RL in goods
produced, for instance, plastics, papers,
metals and other materials (Kroon and
Vrijens 1995).
Ferguson and Browne (2001) examined the
emerging issues in RL, in particular the information
requirements for RL within the extended enterprise.
They addressed the initial development of possible
distribution channels, their key operational decisions
and supporting information systems for the recycling
of end of life products. Murthy and Djamaludin
(2002) reviewed the literature about different aspects
of warranties for new products. De Brito et al. (2002)
235
discussed over 60 case studies of RL activities and,
based on the studies, they indicated the critical factor
for the practice of RL. They presented the case
studies according to the following: decision-making
focus; network structures; relationships; inventory
management; and planning and control. Dekker et al.
(2004) reviewed multi-echelon RL network models
for closed-loop supply chains (CLSCs). Beullens
(2004) described some important frameworks, models
and insights of RL that had been developed in recent
years. Mitra (2005) provided a detailed review of the
literature on vehicle routing problem with back-
hauling (VRPB). Prahinski and Kocabasoglu (2006)
reviewed the literature in reverse supply chains and
developed 10 research propositions to be studied
using empirical research methods. They found that
opportunities exist to use survey-based research
methods to explain current practices, predominant
and critical issues and managerial techniques used to
manage the reverse supply chain. Srivastava (2007)
classified the green supply chain management
(GrSCM) literature into three broad categories on
the problem context:
(1) literature highlighting the importance of
GrSCM;
(2) literature on green design;
(3) literature on green operations.
Rubio et al. (2008) analysed the main characteristics
of articles on RL published between 1995 and 2005 in
the production and operations management field.
They did not cover adequately all the aspects of
reverse distribution.
The specific objectives of this paper are:
(1) to suggest a classification of available
literature in the field of reverse distribution;
(2) to identify critical issues on each
classification;
(3) to identify emerging trends in the field of
reverse distribution;
(4) based on above, to suggest directions for
future researchers in this field;
(5) as far as possible to consolidate all available
literature on reverse distribution.
The organisation of this paper is as follows. After
a brief introduction, the details of the research
methodology are presented in Section 2. In Section
3, the existing literature has been classified based on
the reverse distribution issues. Detailed discussion on
these classifications along with critical issues on each
is undertaken in Section 4. Finally, Section 5 closes
the paper by offering conclusions and an attempt to
provide some perspectives on future research.
 236 P. Sasikumar and G. Kannan
2. Research methodology
A literature survey was employed as the research
methodology in this study to develop a framework
for reverse distribution. The literature on RL was
collected from the journals in the areas of operations
management, supply chain, material recovery, opera-
tions research, environmental engineering and infor-
mation systems. This survey will be useful to those
researchers who are interested in the modelling and
analysis of reverse distribution networks. The litera-
ture search included journals published by numerous
publishers, in particular Elsevier, Emerald, Inder
Science, Springer link, and Taylor and Francis. As we
pointed out earlier, our aim was to analyse those
articles that directly related to reverse distribution.
3. Classification based on the reverse distribution
issues
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The literature available on RL is reviewed here with a
focus on distribution issues in RL. The literature on
reverse distribution issues is classified into five
categories:
(1) network design for RL;
(2) third-party RL (3PRL);
(3) vehicle routing problem;
(4) decision-making models;
(5) role of information technology in RL.
4. Reverse distribution issues
Reverse distribution can take place through the
forward channel, through a separate reverse channel,
or through a combination of both forward and
reverse channels. The possible functions in the reverse
distribution channel are: collection, testing, sorting,
transportation and processing (Pohlen and Farris
1992). It is necessary to design a distribution network
to perform these functions. The important aspect in a
reverse distribution network is the degree of uncer-
tainty in terms of both quantity and quality of used
products returned by the consumers. Both are
important determinants for a suitable network
structure. Many authors addressed the design of
reverse distribution networks in a product recovery
context. Stuart et al. (2005) addressed the problem of
reducing the inefficiency and excess material
handling in returns processing at a fashion catalogue
distributor.
4.1 Network design for reverse logistics
In conventional supply chains, logistics network
design was commonly recognised as a strategic issue
of prime importance. The location of production
facilities, storage concepts, and transportation stra-
tegies are major determinants of supply chain
performance. Reverse logistics should also be taken
into account during the design of the support
network such as location and capacity of warehouses,
plants, choice of outsourcing vendors, distribution
channel and supporting technology. Efficient imple-
mentation requires appropriate logistics structures to
be set up for the arising goods flow from users to
producers. The design of such logistics networks is
investigated. In almost all of the case studies, mixed
integer linear programming (MILP) location-alloca-
tion models have been proposed to support network
design.
4.1.1 Open-loop reverse supply chain
Recycling can often be described as an open-loop
system, because the products are not returned to the
original producer but can be used in other industries.
Min (1989) developed a multiple objective mixed
integer program to select the most desirable shipping
options (direct versus consolidated) and transporta-
tion modes for product recall. Although he consid-
ered a trade-off between transportation time and cost
associated with RL, his model could not handle
multi-modal situations. Zografos and Samara (1989)
presented a location routing model to study the
hazardous waste transportation and disposal pro-
blem by considering the criteria:
(1) minimise disposal risk;
(2) minimise routing risk;
(3) minimise travel time.
Kroon and Vrijens (1995) reported a case study
concerning the design of a logistics system for
reusable transportation packages. The authors pro-
posed the use of MILP model in which the major
decisions were the determination of the number of
containers, the number of container depots and their
locations, and the service, distribution and collection
fees. The proposed model did not consider the
capacity limits of the depots. Jayaraman and
Srivastava (1995) developed a model for the multiple
facility, multiple levels of equipment problem called
the multiple equipment multiple cover facility loca-
tion-allocation problem. This considered maximal
coverage of demand, including multiple coverage of
demand by equipment of a specific type, given that
each equipment had a certain probability of being
unavailable. Del Castillo and Cochran (1996) pre-
sented a pair of linear programs (one aggregated and
another disaggregated) and a simulation model to
optimally configure the RL network involving the
return of reusable containers so that the number of
 International Journal of Sustainable Engineering
reusable containers was maximised. The authors did
not take into account transportation issues related to
RL.
Marin and Pelegrin (1998) modelled a special type
of location problem (return plant location problem)
to determine the plants to be opened, the amount of
primary product required by each customer (from
plant) and the amount of secondary product returned
from each customer and described heuristic and exact
algorithm. Min et al. (1998) reviewed the existing
location routing problem literature with respect to its
algorithmic development and added realities. Barros
et al. (1998) proposed a two-level location model for
the sand recycling problem and considered its
optimisation using heuristic procedures. They for-
mulated a MILP model to minimise the total cost of
the network. Krikke et al. (1999) also proposed
MILP model for the multi-echelon product recovery
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network design which focused on the remanufactur-
ing of photocopiers. Nagel and Meyer (1999)
discussed a novel method for systematically model-
ling end-of-life networks and showed ways of
improving the existing and new systems with ecolo-
gical and economical concerns. Louwers et al. (1999)
presented a non-linear facility location-allocation
model for the collection and reprocessing of carpet
waste. Duhaime et al. (2000) discussed the collection
and distribution of returnable containers for Canada
post.
Fleischmann (2001) examined reverse supply net-
works consisting of multiple collection points and
central facilities where returned products were
inspected, sorted and refurbished. Shih (2001) utilised
a mixed integer programming model to optimise the
infrastructure design and the reverse network flow for
the recovery of electrical appliances and computers.
Knemeyer et al. (2002) utilised a qualitative metho-
dology to examine the feasibility of designing an RL
system to recycle and/or refurbish end-of-life compu-
ters that were deemed no longer useful by their
owners. Hu et al. (2002) formulated a linear
analytical cost-minimisation model for a multi-time-
step, multi-type hazardous wastes RL system. De
Brito and Dekker (2002) provided a decision frame-
work for RL in terms of strategic, tactical and
operational aspects of the problem. Ammons et al.
(2002) addressed the network design problem of
uncertainty by a solution methodology using an
upper and lower-bounding scheme on the robust
objective function, instead of examining the results
from a finite set of scenarios. Pochampally and
Gupta (2003) utilised a three-phase mathematical
programming approach to effectively design an
efficient reverse supply chain network. In Phase I,
they selected the most economical product to
237
reprocess from a set of different types of used-
products, using a mixed-integer mathematical pro-
gramming model. Phase II implemented the analytic
hierarchy process to identify potential facilities in a
set of candidate recovery facilities. Phase III solved a
single time-period discrete location model to achieve
transportation of the right mix and quantities of
goods across the reverse supply chain network.
Jayaraman et al. (2003) formulated a MILP model
to determine an efficient strategy for the RL
operations of hazardous products. The objective of
the model was to find the optimal number and
location of collection and refurbishing facilities with
the corresponding flow of the hazardous products.
Bogataj and Bogataj (2004) presented a facility
location problem to achieve optimal response time
in the lead time study in the frequency space, where
different perturbations could appear. Realff et al.
(1999, 2000, 2004) proposed a robust approach
extension to a design model for carpet recycling
previously considered in Ammons et al. (1999).
Savaskan and Van Wassenhove (2006) examined
how the allocation of product collection to retailers
impacts their strategic behaviour in the product
market, and discussed the economic trade-offs the
manufacturer faced while choosing an optimal
reverse channel structure. Bautista and Pereira
(2006) focused on the problem of locating collection
areas for urban waste where different types of waste
(glass, paper, plastic, organic material) were stored in
special refuse bins. Min et al. (2006a) proposed a
MILP model and a genetic algorithm to solve the RL
problem involving product returns with the objective
of minimising the total RL cost. A MILP model was
also developed by Sharma et al. (2007) to facilitate
better leasing and logistics decisions (including end-
of-life disposal options) from the perspective of an
electronic equipment leasing company. Pati et al.
(2006a, 2006b) proposed a linear programming
optimisation model to minimise the supply chain
cost for the Indian paper industry with two different
sources of raw materials (wood and wastepaper).
Kara et al. (2007) presented a simulation model of
an RL network for collecting end-of-life appliances in
the Sydney metropolitan area and calculated the
collection cost in a predictable manner. Salema et al.
(2007) proposed a generalised model for the design of
an RL network where capacity limits, multi-product
management and uncertainty on product demands
and returns were considered. The model was based on
the recovery network model (RNM) proposed by
Fleischmann et al. (2001). Lieckens and Vandaele
(2007) extended a facility-location MILP model in an
RL context with queuing relationships in order to
incorporate a product’s cycle time and inventory
 238 P. Sasikumar and G. Kannan
holding costs, as well as to deal with the higher degree
of uncertainty and congestion, typical characteristics
of these networks. Min et al. (2008) proposed a
mixed-integer programming model and a genetic
algorithm that can solve the RL problem involving
consolidation of returned products. Srivastava (2008)
formulated a multi-echelon, multi-product, multi-
period MILP model (conceptual model) as a bi-level
optimisation problem. Pati et al. (2008) formulated a
mixed integer goal programming model to assist in
proper management of the paper recycling logistics
system in India and studied the inter-relationship
between multiple objectives (with changing priorities)
of a recycled paper distribution network. The
proposed model also assists in determining the
facility location, route and flow of different varieties
of recyclable waste paper in multi-item, multi-echelon
and multi-facility decision-making framework. Aras
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and Aksen (2008) addressed the problem of locating
collection centres of a company for distance and
incentive-dependent returns. They formulated a
mixed integer non-linear facility location-allocation
model to determine both the optimal locations of the
collection centres and the optimal incentive values for
each return type to maximise the profit from the
returns. Neto et al. (2008) developed a framework for
the design and evaluation of sustainable logistic
networks, in which profitability and environmental
impacts are balanced. They introduced a new
methodology based on the properties shared by
multi-objective programming and data envelopment
analysis (DEA). Mutha and Pokharel (2008) pro-
posed a mathematical model for the design of an RL
network handling product returns. The model con-
sidered modular product structure with different
disposal and recycling fractions for each module of
each product.
4.1.2 Closed-loop supply chain
A major issue in reverse distribution is integration of
the forward and reverse channels. Returns informa-
tion captured should be integrated with forward
supply chain information to achieve optimum plan-
ning and reduction of costs. The whole support
network can then be designed in such a way that it
can service both the forward and RL processes
efficiently. This is in line with the concept of a
CLSC design. Remanufacturing and reuse often lead
to closed-loop systems since the product or packages
are returned to the original producer. French and
LaForge (2006) investigated re-use issues and prac-
tices related to CLSCs in process industry firms from
the producer’s perspective with the objective of
identifying important issues in the field. Talbot et al.
(2007) analysed empirical evidence from a sample of
205 environmentally responsive SMEs operating in
the fabricated metal products and electric/electronic
products industries. A coherent research model was
developed which classified the CLSC activities along
two dimensions, the forward and reverse supply
chains.
Clendenin (1997) provided an overview of a
reengineering approach to RL and presented the
methodologies which might be helpful to manage-
ment and the issues associated with business problem
benchmarking as an input to reengineering.
Jayaraman et al. (1999) developed a MILP model
for a closed-loop logistics system. In their model,
only remanufactured products constitute the forward
and reverse flows. Fleischmann et al. (2001) con-
sidered the integration of forward and reverse
distribution, and gave a generic integer programming
formulation. They took two cases of photocopier
remanufacturing and paper recycling, and showed
that there was potential for cost savings if one
undertook an integrated view rather than a sequential
design of the forward and reverse distribution
networks. Similarly Fleischmann et al. (2003) con-
sidered the integration of CLSCs and spare parts
management at IBM. Schultmann et al. (2003)
developed a hybrid approach to establish a CLSC
for spent batteries that combines an optimisation
model for planning a reverse-supply network and a
flow-sheeting process model that enables a simulation
tailored to potential recycling options for spent
batteries in the steelmaking industry. Krikke et al.
(2003) developed a quantitative modelling approach
to support decision-making concerning both the
design structure of a product (Krikke et al. 2004)
and the design structure of the logistics network and
the model was applied to a CLSC design problem for
refrigerators using the real life R&D data of a
Japanese consumer electronics company. Guide et al.
(2003) investigated different remanufacturing strate-
gies and the associated product and process char-
acteristics. The US Navy aviation depots were used as
a typical make-to-order (MTO) example in remanu-
facturing. Beamon and Fernandes (2004) developed a
multi-period integer programming model to study a
CLSC in which manufacturers produce new products
and remanufacture used products. They used the
present-worth method to jointly analyse investment
and operational costs. A sensitivity analysis of the
model was performed, and conclusions were made
regarding model behaviour and performance.
Dyckho et al. (2004) dealt with the expansion of a
supply chain to closed loop systems and analysed the
material flow in the automotive cycle. Seitz and
Peattie (2004) investigated a case of remanufacturing
 International Journal of Sustainable Engineering
engines and addressed the issue of acquiring cores
from this installed base. The issues concerning
customer relationship in the CLSC were also
discussed. Savaskan et al. (2004) addressed the
problem of choosing a suitable channel structure
for the collection of end-of-life returns from custo-
mers. They considered a manufacturer with three
options for collecting such products:
(1) undertaking the collection effort by himself;
(2) providing suitable rewards to the retailer to
undertake the collection effort;
(3) subcontracting the collection effort to a third
party.
Min et al. (2005) presented a non-linear
integer program for solving the multi-echelon,
multi-commodity closed loop network design pro-
blem involving product returns. However, their
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models did not consider temporal consolidation
issues in a multiple planning horizon. Chouinard
et al. (2005) dealt with problems related to the
integration of RL activities into the regular supply
chain and to the coordination of the information
system. Inderfurth (2005) focused on a product
recovery system where, in the context of extended
product responsibility, a manufacturer of original
products was also engaged in remanufacturing used
products taken back from its customers. For this type
of CLSC the optimal recovery and production policy
was evaluated. The analysis was restricted to sta-
tionary demand and return patterns. Sheu et al.
(2005) formulated a linear multi objective program-
ming model to optimise the operations of both
integrated logistics and corresponding used-product
RL in a given green-supply chain. Factors such as the
used-product return ratio and corresponding sub-
sidies from governmental organisation for RL were
considered in the model formulation. Jayaraman
(2006) presented an analytical approach towards
production planning and control for CLSCs with
product recovery and reuse. This approach consists
of a mathematical programming model, remanufac-
turing aggregate production planning, for aggregate
production planning and control. The model was
designed to aid operational decision-makers in an
intermediate to long-range planning environment and
also served as a focal point for developing formal
systems for production planning, inventory control,
and other tactical decision-making. Kumar and
Malegeant (2006) showed that a manufacturer could
create value by implementing a partnership with an
eco-non-profit community organisation in the collec-
tion process of used products for the CLSC. The
study focused on the reuse-a-shoe program of Nike
and the creation of Throwplace.com to point out the
239
benefits of strategic alliances between manufacturers
and eco-non-profit organisations. Srivastava and
Srivastava (2006) developed a conceptual model and
an integrated modelling which utilised product own-
ership data, average life cycle of products, past sales,
forecasted demand and likely impact of environmen-
tal policy measures to manage product returns for
RL by focusing on estimation of returns for select
categories of products in the Indian context. Min et al.
(2006b) proposed a mixed integer non-linear pro-
gramming model to minimise the total RL costs for
the RL problem involving both spatial and temporal
consolidation of returned products.
Vlachos et al. (2007) tackled the development of
efficient capacity planning policies for remanufactur-
ing facilities in reverse supply chains, taking into
account not only economic but also environmental
issues, such as the take-back obligation imposed by
legislation and the ‘green image’ effect on customer
demand. The behaviour of the generic system under
study was analysed through a simulation model based
on the principles of the system dynamics methodol-
ogy. Similarly, Kumar and Yamaoka (2007) pro-
posed system dynamics (SD) modelling methodology
(Spengler and Schroter 2003) to analyse the CLSC
design for the Japanese car industry. Jun et al. (2007)
introduced the research issues on closed-loop product
life-cycle management where product information
flow was closed due to emerging technologies.
Morana and Seuring (2007) presented a classification
of products for end-of-life acquisition based on the
marginal value of time and the product life-time.
Hammond and Beullens (2007) formulated a model
with the intent of examining issues surrounding the
recent European Union directive regarding waste
electric and electronic equipment (WEEE). They
expanded the work of Nagurney et al. (2002) and
Nagurney and Toyasaki (2005) and presented a
variational inequality, CLSC formulation that allows
for such cases. Kocabasoglu et al. (2007) investigated
whether four dimensions of business uncertainty,
namely munificence, dynamism, hostility and hetero-
geneity, influenced investments in both forward and
reverse supply chains. Listes and Dekker (2005) and
Listes (2007) presented a generic stochastic model for
the design of networks comprising both supply and
return channels, organised in a closed loop system.
The authors described a decomposition approach to
the model, based on the branch-and-cut procedure
known as the integer L-shaped method. Seitz (2007)
focused on in-depth case studies within the remanu-
facturing facilities of a major European vehicle
manufacturer. Webster and Mitra (2007) examined
the impact of take-back laws within a manufacturer/
remanufacturer competitive framework. They
 240 P. Sasikumar and G. Kannan
developed a general two-period model to investigate
questions of interest to policy-makers in government
and managers in industry. Lu and Bostel (2007)
proposed a two (0,1) level mixed integer program-
ming model, in which simultaneously forward and
reverse flows and their mutual interactions were
considered. The problem was formulated as an
uncapacitated facility location model and an algo-
rithm based on Lagrangian heuristics was developed.
Lee and Dong (2008) discussed the logistics
network design for end-of-lease computer products
and developed a deterministic programming model
for systematically managing forward and RL flows
with the objective of minimising the total cost in the
logistics network. Mitra and Webster (2008) analysed
a two-period model of a manufacturer who makes
and sells a new product and a remanufacturer who
competes with the manufacturer in the second period
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and examined the effects of government subsidies as a
means to promote remanufacturing activity. Chung
et al. (2008) proposed a multi-echelon inventory
system with remanufacturing capability. They devel-
oped a CLSC inventory model that maximised the
joint profits of the supplier, the manufacturer, the
third-party recycle dealer and the retailer under
contractual design. Fuente et al. (2008) proposed an
integrated model for supply chain management in
which the operation of the reverse chain was built
based on the existing processes of the forward chain.
Finally the proposed model was validated in a
company from the metal-mechanic sector.
Kusumastuti et al. (2008) developed a facility
location-allocation model for redesigning a closed-
loop service network at a computer manufacturer.
The model considered the possibility of having the
network span across several countries and multi-
period planning horizons. Sheu (2007) presented a
coordinated RL management system for multi-source
hazardous wastes in a high-technology manufactur-
ing region. A linear multi-objective analytical model
was formulated to minimise both the total RL costs
and the corresponding risks. Sheu (2008) formulated
a linear multi-objective optimisation model to optimise
the operations of both nuclear power generation and
the corresponding induced waste RL. Factors such as
the operational risks induced in both the power
generation and RL processes were considered in the
model formulation. Gu and Ji (2008) presented a cost-
minimisation operational model for the integrated
logistics of a remanufacturing/manufacturing (R/M)
system based on the consumer market. The function-
ality of the proposed operational model focused
mainly on production planning and distribution plan-
ning of the renew/new products of the period T,
collection planning and distribution planning of the
used-products of the period T-2, disassembly planning
and distribution planning of the disassembled products
of the period T-1. Kannan et al. (2008b) designed an
integrated forward logistics multi-echelon distribution
inventory supply chain model and closed loop multi-
echelon distribution inventory supply chain model for
the built-to-order environment using genetic algorithm
and particle swarm optimisation and the proposed
model was validated by considering two case studies:
one for a tyre manufacturer and the other for a plastic
goods manufacturer.
4.2 Third-party reverse logistics (3PRL)
Reverse logistics may take place either through the
original network or through specialised logistical
providers (third-party logistical providers). When
considering outsourcing decisions (Serrato et al. 2007)
for RL, the fundamental factor to consider is whether
there is a viable third-party reverse logistics provider
(3PRLP) for the type of RL network required.
Krumwiede and Sheu (2002) developed a RL
decision-making model to guide the process of
examining the feasibility of implementing RL in
third-party providers such as transportation compa-
nies. Spicer and Johnson (2004) proposed the concept
of third party demanufacturing. It was defined
as an extended producer responsibility approach in
which private companies take up end-of-life responsi-
bility for products on behalf of the original equip-
ment manufacturer (OEM). Mukhopadhyay and
Setoputro (2006) proposed the use of fourth party
logistics (4PL) as a return service provider. They
presented a profit-maximisation model to jointly
obtain the optimal policies for the seller and the
4PL through the use of Stackelberg-like game theory,
where the seller acts as the leader and the 4PL acts as
the follower. Ko and Evans (2007) developed an
optimisation model and associated algorithm to
design an integrated logistics network for 3PLs.
Min and Ko (2008) proposed a mixed-integer
programming model and a genetic algorithm to solve
the RL problem involving the location and allocation
of repair facilities for 3PLs. Du and Evans (2008)
addressed a problem involving a manufacturer out-
sourcing to a third-party logistics (3PL) provider for
its post-sale service. They developed a bi-objective,
mixed integer programming optimisation model for
the RL networks that dealt with the returns requiring
repair service.
4.3 Vehicle routing problem (VRP)
The vehicle routing problem in RL system design is
the problem of routing vehicles to serve a set of
 International Journal of Sustainable Engineering
locations for both delivery and backhaul of products.
The Tabu Search (TS) method has been proved to
cope sufficiently with VRP problems.
Jennings and Scholar (1984) formulated the
regional hazardous waste management system as
simply a vehicle routing problem in an attempt to
accomplish the goal of either minimum cost or
minimum risk. In ReVelle et al. (1991), a synthesised
linear programming method was proposed to manage
the RL flows of spent nuclear fuel. Chang et al.
(1997) suggested that short-term planning of vehicle
routing and scheduling problems would be a valuable
subsequent analysis after the completion of long-term
regional planning for solid waste management.
Dethloff (2001) investigated the relationship between
the vehicle routing problem with simultaneous
delivery and pick-up and other vehicle routing
problems, and suggested a heuristic construction
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procedure to a real life problem. Beullens et al.
(2003) provided an excellent survey of sector design
models in RL and discussed the vehicle routing issues
in an RL systems. Süral and Bookbinder (2003)
solved exactly small instances of a particular case of
problem in which each customer had a pickup or a
delivery demand, but not both, and hence was
visited only once. Nearest neighbour or sweep
constructive procedures, as well as improvement
procedures making customer relocations were pro-
posed. The single vehicle routing problem with
deliveries and selective pickups arises in a number
of RL contexts in which customers returned goods
(e.g. empty containers) to the depot. Such a
problem, encountered in the Quebec City area,
was recently analysed by Privé et al. (2006). It
involved the delivery of bottled water and soft
drinks to convenience stores and the collection of
empty bottles and aluminium cans. Mourao and
Amado (2005) presented a new heuristic method to
find high quality solutions for a mixed capacitated
arc routing problem, inspired by the household
refuse collection problem in Lisbon. Schultmann
et al. (2006) modelled RL aspects with vehicle
routing planning. The objective was to generate a
tour schedule with minimum cost.
McKinnon and Ge (2006) examined the recent
trend in empty running by trucks in the UK and
assessed the potential for a further reduction in empty
running in the food supply chain using a new
technique. Alshamrani et al. (2007) examined an
RL problem, motivated by blood distribution for the
American Red Cross, where containers in which
products were delivered by a single vehicle from a
central processing point to customers (stop) in one
period were available for return to the central point in
the following period. Krikke et al. (2008) presented
241
an approach (MUST and CAN orders) to optimise
the collection (transportation) of dismantled materi-
als from end-of-life vehicles in real life cases for auto
recycling and they discussed an application of online
monitoring of inventory levels in RL to improve the
collection efficiency of the mandatory collection of
dismantled materials. The routing problems were
solved by a combination of route generation and set
partitioning. Aras et al. (2008) addressed the collec-
tion centre location problem (CCLP) of a company
that aims to collect used products from product
holders. They formulated a mixed-integer non-linear
facility location-allocation model to find both the
optimal locations of a predetermined number of
collection centres and the optimal incentive values for
different return types. Since the problem is NP-hard,
they developed a Tabu Search based heuristic called
TS-CCLP which incorporated a simplex search
procedure as a subroutine. Gribkovskaia et al.
(2008) formulated a mixed integer, linear program-
ming model for single vehicle routing problem with
deliveries and selective pickups. The objective was to
design a vehicle route of minimum net cost, visiting
each customer, performing all deliveries, and a subset
of the pickups.
4.4 Decision-making models
Multi-criteria decision-making (MCDM) is one of the
most widely used decision methodologies in the
sciences, business, government and engineering
worlds. MCDM methods can help to improve the
quality of decisions by making the decision-making
process more explicit, rational and efficient.
Meade and Sarkis (2002) developed a model for
selecting and evaluating 3PRLP using analytic net-
work process (ANP). However, their model did not
represent a tool for determining whether or not to
outsource RL activities, but it helped in the decision
of selecting a 3PRLP once the outsourcing strategy
was chosen by the firm. Guide and Pentico (2003)
developed a hierarchical decision model for remanu-
facturing and reuse. Haas and Murphy (2003)
presented three techniques along with the basic
Charnes, Cooper and Rhodes (CCR) model to
compensate for non-homogeneity in decision-making
units in DEA and the results showed that none of the
adjustment mechanisms are clearly superior to the
unadjusted CRR model. Bufardi et al. (2004)
proposed a multi-criteria decision-aid approach to
aid the decision-maker in selecting the best compro-
mise EOL alternative on the basis of his/her
preferences and the performances of EOL alterna-
tives with respect to the relevant environmental,
social and economic criteria. A case study was
 242 P. Sasikumar and G. Kannan
provided to illustrate how the proposed ELECTRE
III could be used for product EOL alternative
selection in real-world applications. Srivastava and
Srivastava (2005) developed a hierarchical decision-
making framework to find the feasibility of profit-
driven RL networks. Ravi et al. (2005a) presented an
ANP-based decision model to structure the problem
of conduct of RL for EOL computers in a
hierarchical form and linked the determinants,
dimensions, and enablers of the RL and the
alternatives available to the decision-maker for a
computer industry. A combination of balanced
scorecard and ANP-based approach provided a more
realistic and accurate representation of the problem
for conducting RL operations. Ravi et al. (2005b)
employed an interpretive structural modelling (ISM)
based approach to model the RL variables typically
found in computer hardware supply chains. These
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variables had been categorised under ‘enablers’ and
‘results’. The main objectives were: to identify and
rank the variables of RL activities in the computer
hardware industry; to find out the interaction
among identified variables; and to understand the
managerial implications of this research. Ravi and
Shankar (2005) analysed the interactions between
those major barriers that prevent the application of
RL in automobile industries using ISM methodol-
ogy. Tan and Kumar (2006) presented a decision-
making model for manufacturers to maximise their
profits in RL operations. A system dynamic model
was developed to complement prior models and was
validated using data collected from a computer
manufacturer handling returns with volumes trans-
acted over a period of two years. Bian and Yu
(2006) analysed various countries in the Asia pacific
region to determine their suitability for carrying out
RL operations for an international electrical man-
ufacturer using the analytical hierarchy process
(AHP). Kuo et al. (2006) presented an efficient
green fuzzy analysis method to allow designers to
evaluate different design alternatives. Fuzzy analysis
was used to reduce the bias caused by the weighting
factor, design attributes and people. They con-
structed the hierarchical structure of environmen-
tally-conscious design indices by using AHP with
four aspects, namely, inventory analysis, impact
analysis, life-cycle cost analysis and improvement
analysis.
Staikos and Rahimifard (2007) applied AHP as a
decision-making model to identify the most appro-
priate reuse, recovery and recycling option for
post-consumer shoes. Lu et al. (2007) presented a
multi-objective decision-making process for green
supply chain management to measure and evaluate
the supplier’s performance using AHP modified by a
fuzzy logic process. Araz et al. (2007) proposed a
methodology for a outsourcing management utilising
information obtained from outsourcing selection
process. The proposed methodology was based on
preference ranking organisation METHod for enrich-
ment evaluations (PROMETHEE) and fuzzy goal
programming. Similarly, Queiruga et al. (2008)
applied PROMETHEE as a multi-criteria decision-
making method for the selection of good alternatives
for potential locations of WEEE recycling plants in
Spain. Shi et al. (2008) applied AHP to examine and
prioritise underlying barriers to adoption of cleaner
production by SMEs in China from the perspectives
of government, industry and expert stakeholder
groups. In Ravi et al. (2008), a combination of
ANP and zero one goal programming was used as a
solution methodology to deal with a problem related
to the selection of feasible RL for EOL. Gomes et al.
(2008) presented two cases where the decision-makers
had different preferences. In the first case, social
agents required an evaluation of different disposal
alternatives for plastic waste. In the second case,
existing construction and demolition waste recycling
facilities required a performance evaluation. With
the help of a multi-criteria decision aiding hybrid
algorithm, a multi-criteria decision support system
under development at COPPE/UFRJ and CASNAV,
a consistent hierarchy of the possible alternatives was
achieved. Shankar et al. (2008) employed an SD
approach to model RL variables (enablers, results
and inhibitors) in an automobile company, and the
interactions among the variables affecting the system
was investigated and a causal relationship developed.
Efendigil et al. (2008) proposed a method for
selecting appropriate and desirable third-party ven-
dors taking the subjective requirements of the
company into account. The proposed methodology
outlined the development of a conceptual framework
integrating fuzzy logic and artificial neural networks
as a tool while including the environmental factors in
the design of an RL provider selection. Kannan et al.
(2008a) analysed the interaction of criteria that was
used to select the green suppliers who addressed the
environmental performance using ISM and AHP and
the effectiveness of the model was illustrated using an
automobile company. Kannan et al. (2008c) pro-
posed a multi-criteria decision-making model for
selecting the collecting centre location in the RL
supply chain model using a analytical hierarchy
process and fuzzy analytical hierarchy process.
Wadhwa et al. (2008) made an attempt to bring
fuzzy-based flexible MCDM and RL together as a
well-suited group decision support tool for alterna-
tive selections.
 International Journal of Sustainable Engineering
4.5 Role of information technology in reverse
distribution
One of the most serious problems that companies
face in the execution of an RL operation is the dearth
of good information systems. In order to overcome
this threat, a flexible RL information system is
required. Dhanda and Hill (2005) showed that
information systems and information technology
play an important role in the support of an RL
process. Reverse logistics is typically a boundary-
spanning process between the companies or business
units of the same company, thus developing systems
that have to work across boundaries adds additional
complexity to the problem. As an example for a
retailer, a system that tracks returns at store level is
desirable. The system should create a database at
store level so that the retailer can begin tracking
returned product and follow it all the way back
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through the supply chain. Information systems
should also include detailed information programs
about important RL measurements, such as return
rates, recovery rates, and returns inventory turnover,
etc. For many companies, current information
systems do not allow them to monitor the status of
their returns. Additionally, useful tools such as radio
frequency are helpful. New innovations such as two-
dimensional bar codes and radio frequency identifi-
cation license plates (RFID) may soon be widely
used.
Sarkis et al. (2004) discussed reverse e-logistics
issues and practices associated with the execution and
management of the reverse e-logistics function with
respect to the natural environment. Information and
communication technology can help companies
realise new, innovative business opportunities in the
area of CLSCs (van Nunen and Zuidwijk 2004).
Mukhopadhyay and Setoputro (2004) examined the
return policy in the context of the e-business setting
where the manufacturer or a retailer was selling
directly to customers via the Internet. They developed
a profit-maximisation model to obtain optimal
policies for price and the return policy in terms of
certain market reaction parameters. Daugherty et al.
(2005) provided an insight about how RL perfor-
mance can be influenced by key strategic decisions by
taking a survey of businesses in the automobile
aftermarket industry. Finally, they suggested that
information support for authorising, tracking, and
handling returns can positively impact both economic
and service quality-related performance. Radio fre-
quency identification has become an emerging
technology (Saar and Thomas 2003) in the fields of
supply chain management, manufacturing and logis-
tics. A typical RFID system consists of tags and
243
readers, application software, computing hardware
and middleware. Wager et al. (2005) analysed the
potential impact of the broad application of RFID
labels in municipal solid waste and discussed the
results from the perspective of the precautionary
principle. Parlikad and McFarlane (2007) discussed
how RFID-based product identification technologies
can be employed to provide the necessary informa-
tion in product recovery decisions.
5. Conclusion and research implications
Implementation of legislation, social responsibility,
corporate imaging, environmental concern, economic
benefits and customer awareness are forcing OEMs
not only to provide more environmentally-friendly
products but also to take back their used, end-of-
lease or end-of-life products, or products under
warranty to minimise waste and conserve resources.
Therefore, OEMs have turned to a better design of
their products for maximum reuse and recycling and
to the retrieval of used products through a network
for reuse, remanufacture, recycling or disposal, so
that maximum value can be achieved from their used
products. Reverse logistics, referring to the distribu-
tion activities involved in product returns, plays an
important role in achieving ‘green supply chains’ by
providing customers with the opportunity to return
the warranted and/or defective products to the
manufacturer. In view of this focus, we have analysed
the literature that has been published in various
scientific journals on reverse distribution, and as far
as the methodology employed in the articles is
concerned, we grouped the articles based on the
content issues and the critical issues are addressed on
each classification. In accordance with our findings
from the literature review, the following conclusions
are presented.
N It is observed that more research work has
recently been carried out on the network
design issue, particularly in CLSCs. Network
design for heterogeneous products recovery
with uncertain return rate is to be studied (Lee
and Dong 2008) in the future.
N All the multiobjective programming models
discussed are bi-objective only. So, there is a
research scope for considering more than two
objectives.
N Radio frequency identification is an emerging
technology in the information and commu-
nication field. So, there is a large research
potential to make use of this technology in RL.
N Lieckens and Vandaele (2007) only used a
differential evolution algorithm for problem
 244 P. Sasikumar and G. Kannan
solving and there is a research opportunity to
make use of a non-dominated sorting genetic
algorithm and sheep flocks heredity model
algorithm as a problem-solving tool in the RL
field.
N In vehicle routing problems, time-varying road
traffic conditions can be considered by incor-
porating the queuing effects caused by trans-
portation.
N More statistical analysis can be conducted to
identify the sensitive parameters of the net-
work model.
N From the literature, it is identified that there is
a research potential to make use of VIKOR,
ELECTRE, SAW, SIR, UTA, TACTIC,
MAVT and Performance value analysis as a
multi-criteria decision-making tool for the
selection of 3PRL providers and facility
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locations (collecting centre location, recycling
and remanufacturing facility location, and
disposal site, etc.).
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