Simultaneous Pickup-and-Delivery Production-Routing Problem in closed-loop supply chain with remanufacturing and disassembly consideration

In a context of Closed-Loop Supply Chain, Production-Routing Problem with Pickup and Delivery is presented. In its basic form, Production-Routing Problem (PRP) attempts to solve jointly Dynamical Lot-Sizing and Inventory-Routing Problems. In this paper, a novel PRP model seeking to minimize the total cost of manufacturing, remanufacturing, disassembly, inventory, and routing by taking into account the remanufacturing and disassembly processes of End-of-Life returned products is provided. Novel hybrid heuristics based on Two-Phase Iterative and Relax-and-Fix heuristics were developed and outperform Branch-and-Cut algorithm for large size instances with a small vehicle capacity. Main insights derived from sensitivity analyses are (i) managers can use the model to trade off the cost saving resulting from the integration of forward and reverse flows, on the one hand, and any additional cost incurred by the organizational changes related to the integration, on the other hand, (ii) a high level of remanufacturing rate for returned products is not necessarily profitable, and managers should develop a return policy that leads to the appropriate level of remanufacturing rate, and (iii) investing in expanding the remanufacturing or the disassembly capacities can significantly reduce the total cost until a threshold level, beyond which any further investment is not beneficial. •Production-Routing Problem covering remanufacturing and disassembly processes is formalized.•The integration of forward and reverse supply chain decisions can significantly reduce the total cost.•The impacts of returned products’ remanufacturing rate as well as remanufacturing and disassembly capacities are studied.•Heuristics developed perform very well for large-size instances.