Distribution-Free Stochastic Closed-Loop Supply Chain Design Problem with Financial Management

Dapeng Yang, Daqing Wu and Luyan Shi
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Dapeng Yang: School of Economics and Management, Tongji University, Shanghai 200092, China
Daqing Wu: College of Economics and Management, Shanghai Ocean University, Shanghai 201306, China
Luyan Shi: Business School, Hohai University, Nanjing 211100, China

Sustainability, 2019, vol. 11, issue 5, 1-23

Abstract: Financial flow is an important part of supply chain management (SCM) and increasingly playing a crucial role as the amount of global trade increases. Reasonable and scientific financial operation is necessary in closed-loop supply chain management, especially when customer demand is uncertain. However, financial flow, which may lead to an increase in effectiveness, has rarely been considered in the literature. In this paper, we present a closed-loop supply chain design with financial management problem, which is tackled as a stochastic programming model with ambiguity demand set. The main contributions of this work include: (i) A joint chance constrained programming model is proposed to maximize the total profit, and (ii) financial flow and uncertain demand are both taken into consideration. According to the characteristic of the problem, we chose four approaches, namely sample average approximation (SAA), enhanced sample average approximation (ESAA), Markov approximation (MA), and mixed integer second-order conic program (MI-SOCP). Computational experiments were conducted to compare the adopted methods, and 10,000 scenarios were generated to examine the reliability of the methods. Numerical results revealed that the Markov approximation approach can achieve more reliable solutions.

Keywords: closed-loop problem; uncertain demand; financial management; ambiguity set (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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