The influence of reverse flow on the dynamics of closed-loop supply chains

Abstract

The purpose of this paper is to study the impact of reverse logistics’ factors on the order and inventory variance amplification in a closed-loop supply chain. We adopt a difference equation math approach for analysing a closed-loop supply chain. Results show how the return flow positively affects both the inventory variance and the bullwhip effect independently of the number of echelons. On the contrary, an increasing remanufacturing lead-time negatively affects both the two metrics studied independently of the above mentioned settings. However, when the number of echelons increases, the benefit provided by the return flow tends to decrease.