An integrated System Dynamics model for Closed Loop Supply Chains under disaster effects: The case of COVID-19

For a Closed Loop Supply Chain (CLSC), disaster is a risk source of unknown-unknowns, which may result in production disruptions with significant consequences on -but not limited to-profitability. For this reason, we provide a System Dynamics (SD)-based analysis for disaster events on the operation of CLSCs in order to study the system response (production/collection/disassembly/remanufacturing/recycling rates, inventories, cost, profit). This response is examined through the dynamics at a manufacturer, parts producer, collector, and disassembly center level, by providing control mechanisms for resilient CLSCs under disaster effects. In this dynamic analysis, COVID-19 is treated as a disaster event. Five different business scenario settings are presented for the manufacturer, which are considered as alternative mitigation policies in responding to product demand. The extensive simulation results provide insights for policy-makers, which depend on the reduction in manufacturer's production, reduction in product demand and duration of recovery period which are considered as causal effects due to the COVID-19 outbreak. For all combinations, holding base stocks during the pre-disaster period is proposed as the best mitigation policy in terms of manufacturer's inventory. In terms of economic impact, holding base stocks or coordination with third party are revealed as the best choice depending on the combination, while remote inventory policy adoption as the worst choice.