Network integration with forward and returning product flows

Abstract

As connections between customers and suppliers become increasingly complex, the design of transport networks is under growing pressure to achieve efficiency. In response to this challenge, this paper proposes a service network design that takes into account both the forward flows from a production facility to a customer and the returning flows from customers to the production facility. The design allows for products to be shipped directly or to be consolidated and sorted at a depot. To assess the benefits of optimising both the forward and returning flows simultaneously in terms of network costs, the paper formulates an arc-based model and applies it to a real-life case. The results indicate that the network costs can be reduced by optimising simultaneously, as depots are built in the optimal locations and with the right capacity. This contrasts with the sequential method, which does not account for the return flows and can lead to suboptimal depot placement.