Facility location and scale optimisation in closed-loop supply chain

This paper solves a strategic-level decision problem on determining the optimal location of (re)manufacturers and logistics centres with the consideration of facility scales in an integrated closed-loop supply chain network. A two-stage stochastic mixed-integer non-linear programming model is established to minimise the fixed cost and the expected operation costs under uncertain demand and return. We develop an improved tabu search heuristic algorithm to solve the model. We also design a distance-based decision rule to validate the effectiveness of the proposed model. Numerical experiments are conducted to test the performance of the proposed model and the solution method. In addition, sensitivity analysis is provided to investigate the influences of varying inspection locations and recovery rates on the final performance.