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Examining the balance between efficiency and resilience in closed-loop supply chains.
María de Arquer1, Borja Ponte1, Raúl Pino1
1Department of Business Administration, Polytechnic School of Engineering of Gijón, University of Oviedo, Oviedo, Spain.
Central European Journal of Operations Research
|August 20, 2021
Summary
Optimizing hybrid supply chains for efficiency can harm resilience to demand shocks. Managers must balance inventory costs and production smoothness for effective circular economy models.
Area of Science:
- Operations Research
- Supply Chain Management
- Industrial Engineering
Background:
- Hybrid systems integrate manufacturing and remanufacturing to meet customer demand.
- Proportional Order-Up-To (POUT) replenishment policies manage serviceable inventory.
- Circular economy models necessitate efficient and resilient supply chains.
Purpose of the Study:
- To analyze the efficiency of a hybrid manufacturing-remanufacturing system using a POUT policy.
- To assess the system's resilience to demand volatility and shocks.
- To identify the trade-off between efficiency and resilience in closed-loop supply chains.
Main Methods:
- Control-theoretic analysis to model system dynamics.
- Simulation techniques to evaluate performance under various scenarios.
- Measurement of inventory performance (holding vs. stock-out costs) and the Bullwhip effect.
Main Results:
- Tuning the POUT controller for optimal efficiency can negatively impact resilience.
- A significant trade-off exists between system efficiency and resilience to demand shocks.
- Demand shocks can disrupt inventory levels and production in the closed-loop system.
Conclusions:
- Balancing efficiency and resilience is crucial for effective closed-loop supply chain management.
- Supply chain managers need to carefully consider the identified trade-offs.
- Insights support the transition towards more sustainable and circular economic practices.
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