Inventory policy in closed-loop supply chain: a simulated case study analysis

The primary focus of this paper is to implement inventory policies within the Closed Loop Supply Chain (CLSC) of an electronic manufacturer using Discrete Event Simulation (DES). Additionally, the study delves into examining profitability by employing Periodic-Review and Fixed-Order Quantity inventory policies. The paper uses data from the electronic manufacturing industry’s manufacturers, retailers, distributors, collection sites, repair centres, disassembly facilities, and disposal sites within the Closed-Loop Supply Chain (CLSC). The Discrete Event Simulation (DES) technique is employed to assess the efficacy of inventory policies. A mathematical model/formulation was developed to construct the logic for DES and facilitate profit calculation throughout the simulation. By employing the DES approach, this study effectively replicated the operational behaviour of the existing CLSC. It thoroughly investigated the ramifications of employing the two inventory policies within the SC framework. Though the FOQ costs were lower at 6 out of 8 sites, the total cost of the Periodic-Review model was only 90.85% of that of the FOQ model. The revenue generated by this model is also found to be 8.59% higher, with a 9.58% higher profit than that of the FOQ model. Applying the two inventory policies at various sites of the CSLC using mathematical modelling and simulation provides deeper insights into their performance and can aid inventory managers in informing policy.