STRATEGIC PLANNING OF CIRCULAR SUPPLY CHAINS WITH MULTIPLE DOWNGRADED MARKET LEVELS: A METHODOLOGICAL PROPOSAL

Recent legislation has recognized the importance of adopting Circular Economy (CE) principles in supply chain (SC) restructuring. The primary objective is to create circular supply chains (CSCs) that effectively reintegrate end-of-life (EOL) products into production networks through processes such as reusing, remanufacturing, and recycling. This paradigm shift toward circularity aims to enhance resource efficiency, extend product lifecycle, and minimise waste, thereby aligning firms with sustainable practices while providing them with a competitive advantage.
In line with the goals of the CE, this study focuses on the design and optimisation of strategic decisions within a circular supply chain (CSC). To achieve this aim, a bi-objective mixed-integer linear programming (MILP) model is developed. This model represents a significant contribution as it offers a compact and generalized formulation for dealing with CSC design problems.
The proposed MILP model encompasses several key decision variables and considerations. It determines the optimal number of downgraded market levels to be activated, the location of forward and treatment facilities as well as the optimal product flow within the CSC. Furthermore, the model takes into account the cannibalisation effects associated with the demand for both new and recovered products, ensuring a comprehensive analysis of the system dynamics.
To solve the complex mathematical model, the augmented epsilon-constraint (AUGMECON2) method is employed. The utilisation of this method enables decision-makers to obtain practical solutions within reasonable time frames. The computational results obtained from applying the MILP model illustrate its encouraging potential and effectiveness in dealing with strategic decision-making problems within CSCs.