A scenario-based optimization model for planning and redesigning the sale and after-sales services closed-loop supply chain

Department of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran

^* Corresponding author: teimoury@iust.ac.ir

Received: 14 December 2019
Accepted: 15 November 2020

Abstract

In today’s competitive world, the quality of after-sales services plays a significant role in customer satisfaction and customer retention. Some after-sales activities require spare parts and owing to the importance of customer satisfaction, the needed spare parts must be supplied until the end of the warranty period. In this study, a mixed-integer linear optimization model is presented to redesign and plan the sale and after-sales services supply chain that addresses the challenges of supplying spare parts after the production is stopped due to demand reduction. Three different options are considered for supplying spare parts, including production/procurement of extra parts while the product is being produced, remanufacturing, and procurement of parts just in time they are needed. Considering the challenges of supplying spare parts for after-sales services based on the product’s life cycle is one contribution of this paper. Also, this paper addresses the uncertainties associated with different parameters through Mulvey’s scenario-based optimization approach. Applicability of the model is investigated using a numerical example from the literature. The results indicate that the production/procurement of extra parts and remanufacturing are preferred to the third option. Moreover, remanufacturing is recommended when the remanufacturing cost is less than 23% of the production cost.