Design and economic analysis of the reverse logistics network for End-of-Life Vehicles

The ambition to attain sustainability and the continuous quest for production and logistics cost minimization as competitive levers are leading to a new concept of "end-of-life" (EoL). Manufacturers know that products can, and must be "reborn". The new challenge is to achieve this while yielding the maximum economic benefit in compliance with international regulations. In this paper the case of End of Life Vehicles (ELV) is considered, following the European Union Directive on ELVs that makes the Original Equipment Manufacturers (OEM) responsible for free take-back and recovery of their vehicles. One of the most critical and challenging issues for logistics management is the development of effective tools to support the strategic, tactical and operational decisions of managers. In this work, an innovative multi-period optimization model for design of an ELV reverse logistics network is proposed. Key features of the model are the integration of forward and reverse logistics for long term strategic choices and specific operational aspects related to reprocessing and reuse of individual components by the OEM. An extensive sensitivity analysis is conducted in order to evaluate the economic impact of the reverse logistics network.