An optimization approach to risk decision-making of closed-loop logistics based on SCOR model

Abstract

In green logistics operation, all logistics processes form a bidirectional closed-loop topology. In order to model and optimize such a kind of structure, a standardized closed-loop logistics operation reference model is built which aims to provide supply chain managers with general analysis. Based on the reference model, potential risks of closed-loop logistics chain can be analyzed including not only the visible forward and reverse logistics flow but also the invisible information flow. A qualitative decision-making model for different logistics organizations under risk is proposed and a profit function is developed according to logistics management decision-making process of all logistics nodes under different risks. The proposed model considers different risk management strategy problems. The optimization problem is described as a multi-objective decision-making problem with minimization of the risk loss as well as risk management cost and maximization of the profit. The profit model is solved by genetic algorithm. In the model, in order to express uncertainties of different risk preference information, risk is assessed by a three-dimensional vector in priority, probability and loss. A quantified reference model is introduced through a three-dimensional vague vector map, where several information gathering methods based on vague set are discussed and compared through a case study.

Keywords:

• closed-loop logistics chain
• supply chain operations reference model
• risk assessment
• vague set
• genetic algorithm

Acknowledgments

This work is supported by the National Natural Science Foundation of China (Grant No. 71171089) and Key Projects of Science and Technology Research Program of Education Department of Hubei Province, China (Grant No. D20101203).