Resilient Closed-Loop Supply Chain Network Design Considering Quality Uncertainty: A Case Study of Stone Quarries

Abstract

According to the important role of the mining industry in the economic growth of developing countries, this industry is taken into consideration, significantly. But few researches have been conducted regarding to developing mining supply chain, taking into account the specific condition of this industry such as disruptions and quality of products. This paper proposes a multi-period multi-product mixed-integer quadratic programming problem to optimize a closed-loop stone supply chain network design. Compared to previous researches, we consider resilience in the mining supply chain for the first time. Furthermore, quality characteristics of extracted and final stones are considered in developed reliable model and two-stage stochastic programming is applied to handle the quality uncertainty in the mining supply chain. Additionally, a price-dependent demand is considered in this research to investigate a competition between local and imported stone prices.  A real case study on Iranian stone mining is analyzed to demonstrate the efficiency and applicability of the proposed model. Finally, some managerial insights are presented as guidance to managers of the mentioned supply chain to make better decisions. The results show that the transportation costs impact profit more than the operational costs. Moreover, West Azerbaijan and Isfahan have great potential for being poles of stone in Iran. West Azerbaijan is also appropriate for exporting stones to neighboring countries, geographically.

Keywords: disruption, Closed-loop Supply Chain Network Design, Resilient, Pricing, Quality, uncertainty