Optimization the Safety Stock in Closed-Loop Supply Chains with Guaranteed Service Model

One of the major topics in supply chain management is inventory control or management on all the items in general supply chain in the face of customer demand uncertainty. One of the issues that will be addressed in the face of demand uncertainty is the safety stock placement in supply chain. Therefore, in this paper, we consider the supply chain with the possibility of returning corrupted products in the chain to other stations for re-manufacturing. In addition, at final station after passing through all the stations, if the product could not pass necessary conditions of usage, it is recycled and then reused in former stations. According to the above explanation, the replenishment times for regular, re-manufactured and recycled items were determined and the permutations of these times were examined to provide logical relations in obtaining the required safety stock. Finally, based on achieved relations and in the frame of guaranteed service model, an integrated model of safety stock optimization in closed-loop supply chain was developed. Also, by conducting several examples, the results of the presented model under different situations are analyzed. The results showed that depending on the structure of the supply chain, taking into account the new approach could be to decrease and in some cases increase the holding costs.