Sustainable supply chain design: A closed-loop formulation and sensitivity analysis

Tarek Abdallah, Ali Diabat, David Simchi-Levi

Research output: Contribution to journalArticlepeer-review


We introduce the uncapacitated closed-loop location inventory model, which captures the interdependency between location inventory decisions in the forward and reverse supply chains. We consider a supply chain network in which a single plant ships one type of product through distribution centres to a set of retailers, each with uncertain demand. On the other end, retailers are given the responsibility of collecting and sorting the returned products. Remanufacturing centres serve as the intermediary between recovery of the products and their re-entry to the market as spare parts. A sensitivity analysis for different parameters of the model reveals that the value of recovered products is a major factor in the economic feasibility of the closed-loop network. Finally, we present a flexible framework for policymakers, using carbon credit allocations and trading, to enhance the economic feasibility of reverse logistics, while at the same time penalising companies that do not recover their products.

Original languageEnglish (US)
Pages (from-to)120-133
Number of pages14
JournalProduction Planning and Control
Issue number2-3
StatePublished - Feb 2012


  • Carbon credits
  • Closed-loop supply chain
  • Economic order quantity
  • Flexible legislation
  • Remanufacturing
  • Reverse logistics

ASJC Scopus subject areas

  • Computer Science Applications
  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering


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