Sustainable inventory model for a three-layer supply chain using optimal waste management

The major challenge faced by all the supply chains currently is to reduce supply chain (SC) costs while maintaining the flow of the items and reducing the pressure on the environment. Production of new items requires a significant amount of raw material and energy, which adds to the pressure on nature. In order to save natural resources, reusing, reworking, remanufacturing, and recycling are good alternatives. The present study is focused on developing a resource-efficient rework and remanufacturing model. For efficient control of inventory, the three layers of SC are considered to have a forward supply chain, closed-loop supply chain, and reverse supply chain. The three layers are linked with a collection centre. The collection centre holds the stock of returned items and bifurcates them into minor and major defectives. The minor defectives are sent to the rework plant, where they are reworked and made as-good-as new. The major defective items are sent to the scrap dealer. Thus, scrap dealer bifurcates them into remanufacturable and salvage items. The remanufacturable items are sent to the secondary manufacturer for the secondary product. Using analytical optimization technique, the minimal cost of the system is achieved with the optimal planning horizon. Lingo and Mathematica software are used to find out the optimal solution of the developed model. Also, sensitivity analysis is performed based on several parameters to see how parameters are robust to the objective function.