A Comparison of Forward and Closed-Loop Supply Chains

Over the past years, closed-loop supply chains (CLSC) gained a considerable attention in both academia and industry due to environmental regulations and concerns about sustainability. Although various problems in CLSC’s are addressed by researchers, not much attention is given to the effects of closing the loop in supply chains. In this study, we propose a set of linear programming models for both forward and closed-loop supply chains to see the economic and environmental effects of closing the loop. In addition to the case where there is no emission regulation, we also study the carbon cap policy and compare the forward and closed-loop supply chains under this policy. Computational results bring two important insights to us. First, we see that there are instances in which closing the loop may bring significant cost and emission reductions. Second, we observe that it may be possible to work under lower carbon caps by closing the loop in supply chains.