Network Design in Reverse Logistics: A Quantitative Model

The introduction of (extended) producer responsibility forces Original Equipment Manufacturers to solve entirely new managerial problems. One of the issues concerns the physical design of the reverse logistic network, which is a problem that fits into the class of facility-location problems. Since handling return flows involves a lot of different processing steps, the physical system might consist of two or more echelons. In this paper, a MILP-model is presented that gives decision support in designing the physical network structure of a multi-echelon reverse logistic system. The model is applied to a case from the automotive industry. The general applicability of the model in logistic network design is discussed. Finally, subjects for further research are pointed out