Design of an integrated forward and reverse logistics network optimi-zation model for commercial goods management

Abstract

In this study, an optimization model is formulated for designing an integrated forward and reverse logistics network in the consumer goods industry. The resultant model is a mixed-integer linear programming model (MILP). Its purpose is to minimize the total costs of the closed-loop supply chain network. It is important to note that the design of the logistics network may involve a trade-off between the total costs and the optimality in commercial goods management. The model comprises a discrete set as potential locations of unlimited capacity warehouses and fixed locations of customers’ zones. It provides decisions related to the facility location and customers’ requirements satisfaction, all of this related with the inventory and shipment decisions of the supply chain. Finally, an application of this model is illustrated by a real-life case in the food and drinks industry. We can conclude that this model can significantly help companies to make decisions about problems associated with logistics network design.

Keywords

• forward/reverse logistics network
• network design
• mixed-integer linear programming
• facility location
• commercial goods