Designing a Green Closed-loop Supply Chain Simulation Model and Product Pricing in The Presence of a Competitor

The increasing concern about the deteriorating effects of supply chains related activities on the environment has led to the growing attention to develop green closed-loop supply chains in order to minimize greenhouse gases emission. This paper presents a green closed-loop supply chain model developed under the demand uncertainty aiming at minimizing total cost and total CO2 emission across the supply chain, and maximizing the product’s market share in the presence of a competitor. In this regards, an agent-based market model is developed to estimate the demand’s parameter function then a hybrid simulation model which integrates agent-based and discrete event simulation modelling approaches is designed to simulate the closed-loop supply chain which is the novelty of this paper. Then, scenarios are created using Taguchi design of experiments (DOE) method, and are executed with the market model and the supply chain model to capture total cost, total CO2 and market share. A decision matrix is configured using scenarios and recorded results for three mentioned criteria and ELECTRE and SAW methods are used to rank scenarios and select the best one. The other contribution of this research is its comprehensiveness in considering variables related to three categories of inventory replenishment policy, marketing mix (price and advertisement) and transportation. An automotive industry case is provided to demonstrate the capabilities of the model and its applicability and effectiveness in resolving real-world problems.