Design of Demand Driven Return Supply Chain for High-Tech Products

Many high-tech supply chain operate in a context of high process and market uncertainties due to shorter product life cycles. When introducing a new product, a company must manage the cost of supply, including the cost of returns over its short life cycle. The returns distribution looks like a negative exponential curve, starting with a high flow in returns for a period followed by a sudden drop and low from then on until the peak of life cycle. An important operations decision when launching a new product is the sizing of the capacity and location of return and repair centers in order to stay responsive and serve the market downstream after such a surge in early returns. It is the intention of this paper to extend the classical location models to include the demand return uncertainties and demand driven characteristics of high-tech return centers. We discuss first the operating environment, then brief the existing literature, finally present our fuzzy multi-objective location model, showing its complexities and propose an integrated AHP-weighted max-min solution approach. We show that our model can assist managing the dynamics of early or late return surge and supply of return centers, while target service time is maintained, returned centers’ capacities are balanced, and the total costs are minimized.