Resources, Conservation & Recycling 138 (2018) 215–228

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Resources, Conservation & Recycling

journal homepage: www.elsevier.com/locate/resconrec

Full length article

Tire forward and reverse supply chain design considering customer T

relationship management
⁎
Maedeh Yadollahiniaa, Ebrahim Teimourya, Mohammad Mahdi Paydarb,
a
School of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran
b
Department of Industrial Engineering, Babol Noshirvani University of Technology, Babol, Iran

A R T I C LE I N FO A B S T R A C T

Keywords: During the last decade, reverse logistics networks have grown dramatically within many supply chains in dif-
Supply chain network design ferent industries. Several evolving factors including economic climate, green image, environment protection
Customer relationship management laws and social respolities force companies to revise their strategies. In this paper, a tire forward and reverse
Uncertainty supply chain is designed, and a multi-objective, multi-period, multi-product mixed integer linear programming
Tire
model considering uncertainty is developed. Moreover, a novel idea of integrating customer relationship man-
Robust optimization
agement concept and supply chain management is proposed and incorporated into the mathematical modeling
Multi-choice goal programming
framework. The proposed scenario-based multi-objective model is then solved following robust optimization and
revised multi-choice goal programming approaches. In order to discuss the managerial implications of the model
and its results, the realization rates of the objectives, considering their importance to the supply chain, are
illustrated. The model is implemented in LINGO 9 software package and solved utilizing the branch-and-bound
method. The results demonstrate the applicability of the model in real world situations.

1. Introduction
Statistics show that over 17 million tons of scrap tires are generated
annually all over the world (Simic and Dabic-Ostojic, 2016). Used tires
contain hazardous materials that can threaten human health, pollute air
and water resources and endanger life on Earth; therefore, end-of-life
tires can cause serious problems if not considered properly (Subulan
et al., 2015). In addition, some critical factors such as government
regulations, economic issues, increscent customer awareness and social
responsibilities have made both academia and industrial practitioners
pay a special attention to finding out best ways to deal with the problem
of used tires in recent years.
Proper supply chain management (SCM) can be a solution to the
problem of planning scrap tires. Due to the fact that there are numerous
forward supply chains (SCs) currently working worldwide, it will be
much more valuable and practical if the planning considers the fact that
some elements of SCs are now working and need to be optimized while
other elements need to be designed and integrated with the existing
ones. Reverse logistics, as opposed to the traditional forward logistics, is
the collection of all activities that deliver wastes or end-of-use/life
products that are no longer needed by users to special facilities for
further recovery or environmentally conscious disposal (Fleischmann
et al., 1997).
One of the main challenges in reverse logistics, especially in the case
of used tires, is the absence of a systematic procedure to collect end-of-
life products for the aim of recycling (de Souza and D’Agosto, 2013).
Legislating much more rigid regulations might be the first and easiest
answer to this problem. However, even with enforcing regulations, an
efficient strategy for the supply chain to collect used tires must be de-
vised in order to help businesses survive the competitive market. A
well-known tool that has brought competitive advantages to many
companies is customer relationship management (CRM), which is
shown to be effective if incorporated into the SCM planning and deci-
sion-making process.
Integrating the SCM and CRM enables companies to achieve a
number of improvements in their financial and performance metrics.
However, most companies rarely consider these two concepts simulta-
neously (Kracklauer et al., 2004). Liu and You (2011) stated that the
CRM is approached from a classical point of view and needs to be
considered through SCs.
Several definitions are proposed for the CRM in the literature and
the best clarified ones are as follows. The CRM is a concept that tries to
develop a relationship by considering two important factors of mar-
keting and customers (Kotler and Keller, 2012). It is a communicating
procedure between an organization’s service and its customers in order
to attract and also keep the organization’s truthful customers

⁎
Corresponding author.
E-mail addresses: m_yadollahinia@yahoo.com (M. Yadollahinia), Teimoury@iust.ac.ir (E. Teimoury), paydar@nit.ac.ir (M.M. Paydar).

https://doi.org/10.1016/j.resconrec.2018.07.018
Received 23 July 2017; Received in revised form 8 July 2018; Accepted 15 July 2018
0921-3449/ © 2018 Elsevier B.V. All rights reserved.
M. Yadollahinia et al.
(Grönroos, 2000). It could be said that the CRM is to introduce the right
product to the right customer at the right time through the right
channel for the aim of fulfilling the customer’s extending demand.
The CRM needs a customer-centered business philosophy and a
culture that supports impressive service processes, marketing and sales.
The point in the CRM is to establish enduring and mutually useful re-
lationships, in which the seller and buyer aim to develop satisfying
interchanges. Discovering new customers and keeping existing ones
informed, engaged and loyal play an important role in the CRM.
One of the main challenges in this article is to incorporate the
concept of the CRM into strategic and tactical SCM decisions; specifi-
cally, network design as a strategic decision is of interest due to the
following reasons. First, a good network design enables a company to
have effective and efficient relationships with its customers. This, in
turn, facilitates activities of the company to recognize and fulfill real
needs of customers, which results in an atmosphere in which customers
are eager to buy the company’s products in the forward flow for the first
time. These customers are initially considered as temporary buyers. By
concentrating on CRM strategies, these temporary customers can be-
come the company’s loyal/key customers through time. Second, with
the CRM in mind, new action plans can be defined for the aim of
maximizing customer satisfaction, which can help to motivate custo-
mers to cooperate with the SC in collecting end-of-use products in the
reverse flow. Third, considering customer requirement, which means
enhancing customer value, can differentiate the SC in the global com-
petitive marketplace, resulting in revenue growth.
Another challenge in reverse logistics of used tires is to find best
ways to process end-of-life products. The first and easiest way might be
disposing used tires in landfills. However, this traditional method of
waste treatment is subject to several known drawbacks and risks. Used
tires are almost non-degradable and occupy considerable landfill
spaces. Increasing global environmental awareness and limited disposal
space have led researchers to seek alternative ways to deal with used
tires, some of which are as follows:
1 Retread: Retreading involves removing the outside or tread of the
tire and adding a new tread.
2 Tire-derived fuel: One of the special features of materials used in
tires is their high heating value. Therefore, it is beneficial to use
scrap tires as fuel. Although it is not recycling indeed, it is preferred
to landfilling. Since scrap tires could be utilized in much more useful
ways, this approach is not very common.
3 Pyrolysis: Chemical decomposition of the tire by high heat under the
restrained condition is called pyrolysis, which can result in carbon
black, oil and steel. Although the mentioned process is totally sci-
entifically achievable, it is not economically affordable. Therefore, it
is not a common treatment of waste tires.
4 Reclaim: Reclaiming is a procedure, in which scrap tire rubber is
converted into a state using mechanical and thermal energy and
chemicals, where it can be mixed, processed, and vulcanized again.
5 Ground rubber applications:
6 Asphalt rubber is the largest single market for ground rubber.
Blending ground tire rubber with asphalt can improve some features
of highway asphalt such as longer lasting road surfaces, reduced
road maintenance, lower road noise, shorter breaking distances, etc.
7 Athletic and recreational applications including ground cover under
playground equipment and running track material
8 Agricultural and horticultural applications as well as soil betterment
9 Molded rubber products, e.g., carpet underlay, dock bumpers, roof
walkway pads, rubber tiles and bricks, etc.
Regarding the above explanations, the old negative attitude towards
used tires as an environmental hazard costing problem can be changed
into a positive perspective with an economic chance and a great op-
portunity. In other words, by holistic and accurate planning in this
field, not only the environmental issues of used tires can be resolved,
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Resources, Conservation & Recycling 138 (2018) 215–228
but also great financial gains could be achieved.
Today, millions of tires are used each year and with the growing
concern about environmental issues in recent years, the problem of
used tires disposal has attracted many practitioners and researchers.
Wide-ranging research efforts are made to reduce the impact of used
tires on the environment; however, applicable operational research
articles on management systems of used tires are still scarce and the
literature provides only a few mathematical models as explained in
Section 2. Moreover, to the best of the authors’ knowledge, no pub-
lished article has addressed the integration of the SCM and CRM in the
operational research models of the problem.
The remainder of this paper is organized as follows. In Section 3, the
problem is defined in detail and a novel scenario-based tri-objective
mathematical model is presented for the proposed problem and its as-
sumptions. For the solution procedure, a two-stage solution approach
including robust optimization and revised multi-choice goal program-
ming is explained in Section 4. The proposed model is validated by an
industrial case study, which is represented in Section 5. Finally, in
Section 6, conclusions and further research guidelines are given.
2. Literature review
2.1. Previous researches in product recovery considering uncertainty
Product recovery is the use of end-of-life products with the aim of
reducing waste and thereby increasing profit. In supply chain network
design, product recovery can be applied to reverse logistics, a closed-
loop supply chain (CLSC) and also forward/reverse SC, depending on
the nature of the product.
For example, in reverse logistics, Realf et al. (2004) discussed the
strategic design of a reverse production system for carpet recycling
industry in the United States. They presented a mixed integer linear
programming (MILP) model to maximize the net profit. They used ro-
bust optimization to consider the uncertainty in their model. Kara and
Onut (2010) addressed the paper recycling reverse supply chain net-
work design and proposed a mixed integer revenue-maximization
model following a two-stage stochastic and robust optimization ap-
proach. Ayvaz et al. (2015) presented a two-stage stochastic program-
ming model to maximize the profit from electrical and electronic
equipment waste recycling companies. Yu and Solvang (2017) proposed
a single-objective stochastic programming model with carbon emission
constraint for sustainable reverse logistics design. Rahimi and
Ghezavati (2018) developed multi-objective MILP for recycling con-
struction and demolition waste reverse logistics network design using
two-stage stochastic programming. In their model, the objectives were
to maximize profit and social impact and minimize environmental ef-
fects.
In the CLSC, Mohamadpour Tosarkani and Hassanzadeh Amin
(2018) introduced a multi-objective model considering green factors for
battery CLSC using fully fuzzy programming. Paydar et al. (2017) de-
signed a CLSC network for used engine oil and considered two objective
functions of maximizing profit and minimizing risk. In order to deal
with uncertainty, they used robust optimization techniques.
As mentioned before, depending on the nature of products, their
recovery can be done in forward and reverse directions in a supply
chain. In this area, El-Sayed et al. (2010) developed a stochastic MILP
model for forward-reverse logistics network design under risk with the
objective of maximizing expected profit. Hatefi and Jolai (2014) con-
sidered both uncertain parameters and facility disruptions in their
forward-reverse logistics network design. The objective function of the
model was to minimize the nominal cost, and robust optimization was
utilized to consider the uncertainty in the network. Mirmajlesi and
Shafaei (2016) investigated short-lifetime products and presented ro-
bust MILP for the forward-reverse supply chain.
This brief review of the researches on product recovery systems was
to clarify the fact that depending on the product and/or industry being
M. Yadollahinia et al. Resources, Conservation & Recycling 138 (2018) 215–228

considered in the study, the structure of the SC can be different. In this

paper, a tire forward and reverse supply chain design is investigated, as
explained in detail in Section 3.

2.2. Previous researches in used tires

In the used tire industry, there are few articles following the
mathematical modeling approach in designing SCs. To the best of the
authors’ knowledge, the newest and most famous researches in this field
are as follows:
Dehghanian and Mansour (2009) designed a sustainable recovery
network for the waste tire industry using life cycle analysis to assess the
environmental impacts of various end-of-life alternatives. They be-
lieved that retreading plants work below their capacities because cus-
tomers find retreaded tires uneconomical. They selected grinding
rubber and incineration in cement kiln as more appropriate approaches
to deal with used tires. In the mentioned paper, a deterministic model Fig. 1. Structure of the existing forward SC.
was presented considering only the reverse direction of the supply
chain. Subulan et al. (2015) proposed a deterministic MILP model for
3. Problem explanation
the tire closed-loop supply chain. They considered environmental issues
by means of a life cycle assessment and Eco-indicator 99. To deal with
3.1. Problem definition
scrap tires, they suggested retreading, recycling, landfilling and using as
fuel. Finally, it was highly recommended to consider uncertainties of
The structure of the investigated forward SC, showing the manu-
various parameters in tire supply chain modeling in future researches.
facturing plant, distribution centers and customers, is illustrated in
Pedram et al. (2017) proposed a single objective, single period MILP
Fig. 1. The manufacturing plant produces new products, which are
model considering the uncertainty of some parameters by the scenario
delivered to customers via distribution centers. This is a schematic re-
analysis for the tire CLSC. In their model, it was assumed that used tires
presentation of a supply chain in the tire industry operating in Iran.
with minimum quality level for remanufacturing are sent for retreading
Obviously, the treatment of used tires is totally neglected in this SC.
and the rest are shipped to recycling centers. Their suggestion for fur-
In order to improve the existing forward SC in terms of used tire
ther research was to work on multi-objective models of the problem.
waste management, a design for the reverse network for used products
Amin et al. (2017) developed a single objective MILP model for the tire
with a focus on collecting and recycling considering the coordination in
CLSC considering uncertainty for a case in Toronto, Canada, with the
the whole SC is developed as shown in Fig. 2. The proposed open-loop
aim of maximizing the total profit of the network. In their simple supply
(forward/reverse) SC network in this study is a multi-echelon network
chain network, only a general option of recycling used tires was con-
including a manufacturing plant, recycling plants, distribution, collec-
sidered and various options for scrap tires were not studied.
tion and hybrid centers and three types of customers.
A critical analysis of the literature calls for scrutinizing the various
In the proposed network configuration, in the forward path, new
used tires handling methods mentioned in the previous section. The
products are conveyed from the existing manufacturing plant to type 1
most controversial method on which the most number of articles are
published is retreading. For many years, retreading has been considered
as an efficient way to solve the problem of used tires regarding its en-
vironmental impact and economical aspect. Since users mostly have
doubt about safety of retreaded tires and the expectation of consumers
preferring brand new tires rather than second-hand ones has increased,
retreading slowly fell out of favor giving space for introduction of a
more appealing solution.
Studies show that grinded rubber can be used as an efficient raw
material in many industries as clarified in Section 1. Adding ground
rubber to the ingredients of some special products, e.g. asphalt, im-
proves many of their features. Farina et al. (2017) showed that asphalt
pavements containing crumb rubber are better than their more common
counterparts in terms of life cycle. Furthermore, this approach is very
cost-effective and great profit could be made using appropriate and
comprehensive planning. The main purpose of this study is to provide
such extensive planning for real world problems of this kind.
Obviously, if the grinding of used tires and their application as ad-
ditives is to be considered, the structure of the supply chain could not be
the CLSC anymore. This is one of the main differentiating features of this
study from those previously published considering retreading. More spe-
cifically, the CLSC structure is replaced by forward and reverse SC con-
figuration. In addition, the uncertainty of parameters, which is their in-
herent feature in the real world, should be considered in applied studies. In
this study, a multi-objective, multi-period, multi-product MILP model
under uncertain demands and capacities is proposed, and the CRM concept
is innovatively incorporated into the SCM structure. This is one of novel-
ties and advantages of this study over the previous studies. In addition, no
previous research is reported on integrating the CRM and SCM. Fig. 2. Structure of the proposed SC network.

217
M. Yadollahinia et al.
customers via the existing distribution centers. In the backward path,
the returned (used) products from Types 1 and 2 customers are trans-
ported to collection centers and hybrid centers. Finally, the used pro-
ducts are shipped to recycling plants, from which the recycled products
are delivered to Type 3 customers.
The key assumptions of this research are as follows:
• Since one of the main strategies of the CRM is to value key custo-
mers, customer segmentation, as of the fundamental essences of the
CRM, is utilized in this study to categorize customers into three
types of customers. Specifically, Type 1 customers are the ones who
buy our new products in the forward flow and return their used
products to the SC in the reverse flow. It is worth mentioning that
customers of this type are the most valuable SC customers and are
considered as key customers. Type 2 customers are those in the
reverse flow of the SC buying the used products. Finally, Type 3
customers purchase the recycled products.
• In order to incorporate the reverse flow into the existing forward SC,
collection centers should be decided on carefully. In this paper,
three options are considered. Option 1 is to enable the existing
distribution centers to also work as collection centers. In other
words, distribution centers can be changed into hybrid (collection/
distribution) ones. Option 2 is to open some new collection centers
and Option 3 is to establish hybrid centers capable of acting as
collection and distribution centers simultaneously.
• The model is a case-based logistics network. It is basically designed
for the new and emerging industry of recycling used tires in Iran.
However, without loss of generality, through minor modifications,
the proposed model can be applied to many other industries, such as
digital and electronic equipment industries.
• Demand in both forward and reverse directions, i.e. demand for new
and recycled products, is assumed to be subject to uncertainty.
Moreover, it is assumed that the capacity of manufacturing and
recycling plants can be expanded to some extent through optimi-
zation and soft improvement attempts such as working time effi-
ciency enhancement. Uncertain parameters in this paper are ex-
plained in terms of scenarios.
• Because of the nature of the product, i.e. tires, the structure of the
proposed SC network is open loop. In other words, forward and
reverse flows are considered without being connected and/or
closed. The recycled tire is not necessarily used in the tire industry.
Specifically, the recycled tire rubber can be used in tire derived fuel,
construction industry, molded rubber products, agriculture industry,
and recreational and sports applications as well as in rubber mod-
ified asphalt applications (Presti, 2013).
• There are multiple products and multiple periods.
• The location of customers, the manufacturing plant and distribution
centers is fixed and predefined.
• The potential location of recycling plants, collection centers and
hybrid centers is known.
• For distribution, collection and hybrid centers, a minimum accep-
table utilized capacity and a maximum capacity in both forward and
reverse directions are considered due to the type of facilities, as
described in detail in Section 3.2.3.
• As mentioned above, in this paper, the CRM concept is incorporated
into the SCM decision-making process. Therefore, some CRM op-
tions and also electronic CRM (ECRM) options are defined and
considered as binary variables in model formulation. The details of
the CRM options are as follows:
• This is an option, in which the SC would give a new product for free
to customers in exchange of β units of the used product being
brought to SC collection centers by customers.
• It is an option that focuses on key customers (Type 1 customers)
exclusively. Here, guarantee is considered only for key customers in
order to differentiate between customers with the aim of enhancing
the value of key customers as well as motivating customers of other
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Resources, Conservation & Recycling 138 (2018) 215–228
categories to be much more loyal to the SC.
• In this option, vehicles are sent to customers who return more than
10 units of the used product to the SC.
• This is an option to propagate the culture of returning and conse-
quently recycling used products by means of advertising.
The ECRM options are:
A It is an option to enhance customers’ willingness to be in contact
with the SC by facilitating the means of telecommunication, i.e.
establishing channels such as SMS, internet and interactive voice
response (IVR) systems with the following goals: 1) explaining the
significance of recycling for this specific kind of used product as well
as its reasons and necessity in order to increase customer awareness
level, which, in turn, results in an increase in customer cooperation
and involvement; 2) Answering customers’ possible questions and
clarifying their doubts and ambiguities, e.g. about the location of
the nearest collection or hybrid center to a customer’s place to re-
turn used products.
B This is an option, in which the SC would inform the customers in the
forward direction about the useful lifecycle of their products and
reminds them when products reach their end-of-life period and
should be returned to the SC for recycling.
With the above assumptions in mind, the main issues to be ad-
dressed by this study are to choose the location and determine the
number of collection, hybrid centers and recycling plants as well as to
determine the existing distribution centers that need to be changed into
hybrid ones as well as the quantity of products transported between
each pair of network facilities along each capacity-constrained stage
under uncertainty of parameters. Moreover, production and recycling
quantity, inventory and backorder levels at each period and CRM de-
cision variables are determined to optimize the objectives described in
what follows.
The proposed model is to optimize three objective functions. The
first objective is to maximize the total profit of the chain, the second
one seeks to maximize the total collected used products from customers
by means of increasing customer satisfaction and CRM strategies, and
the third objective is to minimize the total distance travelled between
the collecting facilities that are meant to be opened and the location of
customers who return their used products the most. In other words, this
objective is to locate and open the collecting facilities that are closer to
customers with the highest cooperation with the reverse chain. It is
worth mentioning that the second and third objectives, which in-
corporate the CRM concept in this study, search in line with each other
and the reason for their separate formulation is that they are inherently
different.
3.2. Problem formulation
To describe the aforementioned SC network, the following notations
are used in the model formulation:
3.2.1. Notations
Indices:
l Index for fixed locations of manufacturing plants, (l = 1,2,…,L)
i Index for fixed locations of distribution centers, (i = 1,2,…,I)
j
k
Index for potential locations for collection centers, (j = 1,2,…,J)
Index for potential locations for hybrid centers, (k = 1,2,…,K)
m Index for fixed locations of Types1 and 2 customers,
n
(m = 1,2,…,M)
Index for potential locations available for recycling plants,
(n = 1,2,…,N)
o Index for fixed locations of Type 3 customers, (i = 1,2,…,O)
M. Yadollahinia et al. Resources, Conservation & Recycling 138 (2018) 215–228

p Index for products in the forward direction, (i = 1,2,…,P) XCRk Maximum capacity of hybrid center k in
p′ Index for recycled products in the reverse direction, receiving used products in the backward
(p′ = 1,2,…,P′) direction
t Index for periods, (t = 1,2,…,T) NCRk Minimum acceptable capacity of hybrid
a Index for CRM options center k in receiving used products in the
s Index for scenarios, (s = 1,2,…,S) backward direction
UFi Maximum capacity of distribution center i
in the forward direction
Parameters: URi Maximum capacity of distribution center i
that changed into hybrid in the backward
direction
PPpt Unit price of product p in period t
CAPpls Capacity of manufacturing product p in
PAp′t Unit price of recycled product p′ in ton in
manufacturing plant l under scenario s
period t
CNns Capacity of recycling plant n under
PCpt Unit supply and production cost of product
scenario s
p in period t
MMp′ The matrix to change the number of unit of
RCp′t Unit supply and production cost of
products into the equivalent weight of
recycled product p′ in ton in period t
products’ components in ton
Dmpts Demand of customer m for product p in
HHplt Unit inventory holding cost of product p in
period t under scenario s
manufacturing plant l in period t
D′op′ts Demand of customer o for recycled
CBOpt Unit backorder cost of product p in period t
product p′ in ton in period t under scenario
M A sufficiently large positive number
s
COB Cost of option B
TDpt Unit transportation cost for product p
COC Cost of option C
shipped from manufacturing plant to
COD Cost of option D
distribution/ hybrid centers in period t
COE Cost of option E
TRpt Unit transportation cost for product p
COF Cost of option F
shipped from collection/hybrid centers to
a=[aA,aB,aC,aD,aE,aF] The influence vector representing the
recycling plants in period t
impact level of the defined CRM options
TO p′t Unit transportation cost for recycled
on customer satisfaction
product p ́ shipped from recycling plants to
Type 3 customers in period t
ICi Fixed cost for changing distribution center Decision variables:
i into a hybrid one
FCCj Fixed cost for opening collection center j
FCHk Fixed cost for opening hybrid center k Qplt Quantity of product p produced by manufacturing plant l in
FCn Fixed cost for opening recycling plant n period t
αt Quantity of used products that can be dealt Q′p′nt Quantity of recycled product p′ produced by recycling plant
with without customer engagement, e.g. n in period t
finding and using a landfill in time period t ABplit Quantity of product p shipped from manufacturing plant l to
γ Average quantity of products being used in distribution center i in period t
the country in each period ACplkt Quantity of product p shipped from manufacturing plant l to
β Number of used products that customers hybrid center k in period t
should return in order to have a free new ADpimt Quantity of product p shipped from distribution center i to
product customer m in period t
DAli The distance between manufacturing plant AEpkmt Quantity of product p shipped from hybrid center k to
l and distribution center i customer m in period t
DBlk The distance between manufacturing plant AFpmkt Quantity of product p shipped from customer m to hybrid
l and hybrid center k center k in period t
DCkn The distance between hybrid center k and AGpmjt Quantity of product p shipped from customer m to collection
recycling plant n center j in period t
DDjn The distance between collection center j AHpmit Quantity of product p shipped from customer m to
and recycling plant n distribution center i in period t
DEin The distance between distribution center i AIpjnt Quantity of product p shipped from collection center j to
and recycling plant n recycling plant n in period t
DFno The distance between recycling plant n AJpint Quantity of product p shipped from distribution center i to
and customer o recycling plant n in period t
MXCj Maximum capacity of collection center j AKpknt Quantity of product p shipped from hybrid center k to
MNCj Minimum acceptable capacity utilization recycling plant n in period t
of collection center j AL Quantity of recycled product p′ shipped from recycling plant
XCFk Maximum capacity of hybrid center k in p′n- n to customer o in period t
receiving products in the forward direction ot
NCFk Minimum acceptable capacity of hybrid ANplts Inventory level of product p at plant l in period t under
center k in receiving products in the scenario s
forward direction BOmpts Backorder level of customer m for product p in period t
under scenario s

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M. Yadollahinia et al. Resources, Conservation & Recycling 138 (2018) 215–228

Xi 1 If distribution center i is opened, 0 otherwise as follows:

Yj 1 If collection center j is opened, 0 otherwise
Zk 1 If hybrid center k is opened, 0 otherwise ⎡OA ⎤
⎢OB ⎥
Wn 1 If recycling plant n is opened, 0 otherwise ⎢OC ⎥
OA 1 If option A is activated, 0 otherwise U (a) = [aA , aB , aC , aD , aE , aF ] ⎢ ⎥
OD
OB 1 If option B is activated, 0 otherwise ⎢OE ⎥
⎢ ⎥
OC 1 If option C is activated, 0 otherwise ⎣OF ⎦ (12)
OD 1 If option D is activated, 0 otherwise
In order to increase customer satisfaction, some CRM options OA-
OE 1 If option E is activated, 0 otherwise
OF, which are predefined and described in Section 3.2.1, are fed into
OF 1 If option F is activated, 0 otherwise
the model as binary variables. These options are established on the
FFpmt Total number of free product p given to customer m as
basis of CRM strategies based on the three reasons mentioned in Section
defined in CRM options in period t
3.1 and with the aim of increasing customer engagement. The influence
coefficient vector, a=[aA,aB,aC,aD,aE,aF], represents the impact level of
3.2.2. Objective functions CRM options on customer satisfaction.
The three objectives of the presented model are maximizing the The range of the function U, described above, is the domain of the
total profit, maximizing total customer satisfaction and minimizing function V that calculates the quantity of the total received used pro-
total distance between collecting facilities that are meant to be opened ducts from customers considering customer satisfaction. Here, the
and customers who return their used products the most. function is assumed to be linear; however, in case of non-linearity, it
can be approximated satisfyingly using linear formulation and fine
Maxf1s = ∑ ∑ ( ∑ ∑ ADpimt + ∑ ∑ AEpkmt ) PPpt tuning through interviews, questionnaires and other data collection
t p i m k m
tools. Finally, the compound function is divided by the average quantity
+ ∑ ∑ ∑ ∑ ALp ′ not PAp ′ t of products being used in the country in every period shown by γ. This
t p′ n o (1) makes the value of the objective function normalized and fall between 0
and 1. The third objective, which can also be considered as a CRM
− ∑ ∑ ∑ PCpt Qplt − ∑ ∑ ∑ RCp ′ t Q′ p ′ nt objective, is to minimize the distance between collecting facilities
t p l t n p′ (2)
(collection, hybrid and distribution centers that are converted into
− ∑ ∑ TRpt ( ∑ ∑ AKpknt DCkn + ∑ ∑ AIpjnt DDjn hybrid ones) that are meant to be opened and customers who return
t p k n j n their used products the most.
+ ∑ ∑ AJpint DEin) − ∑ ∑ ∑ ∑ TOp ′ t ALp ′ not DFno
i n t p′ n o 3.2.3. Constraints
This subsection is devoted to present the constraints of the proposed
− ∑ ∑ TDpt ( ∑ ∑ ABplit DAli + ∑ ∑ ACplkt DBlk )
t p l i l k (3) model. The constraints are categorized into different categories ex-
plained in what follows.
− ∑ FCCj Yj − ∑ FCHk Zk − ∑ FCn Wn − ∑ ICi Xi
j k n i (4) 3.2.3.1. Balance constraints. These constraints, presented in following
equalities and inequalities, are used to ensure the balance in flow and
− ∑ ∑ ∑ HHplt × INplts − ∑ ∑ ∑ CBOpt × BOmpts inventory of products throughout the entire SC.
t l p m p t (5)
Qplt − INplts + INplt − 1s = ∑i ABplit + ∑k ACplkt ∀ p , l, t (13)
− ( ∑ ∑ ∑ FFpmt × PPpt × OA) − (COB × OB ) − (COC × OC )
t p m
∑m BOmpts = ∑m Dmpts − ( ∑i ∑m ADpimt + ∑k ∑m AEpkmt ) ∀ p , t , s
− (COD × OD) − (COE × OE ) − (COF × OF ) (6)
+ ∑m BOmpt − 1s
1 (14)
Max f2 = V (U (a))
γ (10)
Q′ p ′ nt = MMp ′ × ∑p ( ∑k AKpknt + ∑j AIpjnt + ∑i AJpint + αt ) ∀ p′, t , n
Min f3 = ∑ ∑ ∑ ∑ AFpmkt DGmk + ∑ ∑ ∑ ∑ AGpmjt DHmj (15)
t p m k t p m j

+ ∑ ∑ ∑ ∑ AHpmit DImi ∑n ALp ′ not ≤ D′op ′ ts ∀ p′, o, n, s (16)

t p m i (11)
Q′ p ′ nt = ∑n ∑o ALp ′ not ∀ p′, t , n (17)
The first objective is to maximize the total profit by subtracting the
total cost from the total revenue. The terms of this objective are as
∑m ADpimt = ∑l ABplit ∀ p , i, t (18)
follows: (1) Total revenue of selling new products in the forward di-
rection and the recycled products in the reverse direction; (2) the total ∑m AHpmit = ∑n AJpint ∀ p , i, t (19)
supply and production cost in manufacturing plants and recycling cost
in recycling plants; (3) the total transportation cost; (4) the fixed cost ∑l ACplkt = ∑m AEpkmt ∀ p , k , t (20)
for establishing new facilities such as collection centers, hybrid centers,
recycling plants and the fixed cost of converting the existing distribu- ∑m AFpmkt = ∑n AKpknt ∀ p , k , t (21)
tion centers into hybrid ones; (5) the total inventory carrying cost and
backorder cost; (6) the total CRM cost. It is notable that the term ∑m AGpmjt = ∑n AIpjnt ∀ p , j, t (22)
FFpmt × PPpt in (6) calculates the cost of option A.
The second objective is to maximize the number of used products ∑m ( ∑k AFpmkt + ∑j AGpmjt + ∑i AHpmit ) ≤ γ ∀ p , t (23)
being collected from customers. In order to do that, the compound
function V(U(a)) is defined. U(a) is considered as a function for cal- Constraint (13) ensures that at each period and for each product, the
culating customer satisfaction level, and generally can be defined in flow entering each manufacturing plant and its residual inventory from
different forms. In this study, the mentioned function U(a) is introduced the previous period is equal to the summation of the amount

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transported to distribution centers and the residual inventory. AHpmit ≤ M × Xi ∀ p , t , m , i (38)

Constraint (14) ensures that in each time period and for each product
and under each scenario, the sum of the total flow to customers and AKpknt ≤ M × Wn ∀ p , t , k , n (39)
total amount of backorders is equal to the sum of the total demand and
accumulated backorders. Constraint (15) ensures that the total amount AKpknt ≤ M × Zk ∀ p , t , k , n (40)
of recycled products produced by each recycling plant is equal to the
AIpjnt ≤ M × Wn ∀ p , t , j, n (41)
sum of the collected used product flow entering the plant. Constraint
(16) ensures that in each period and under each scenario, the total
AIpjnt ≤ M × Yj ∀ p , t , j, n (42)
amount of each product transported to each customer does not exceed
the total demand of the customer for that product. Constraint (17) AJpint ≤ M × Wn ∀ p , t , i, n (43)
ensures that the total amount of recycled products produced by each
recycling plant is equal to the total amount transported to each Type 3 AJpint ≤ M × Xi ∀ p , t , i, n (44)
customer. Constraints (18)–(21) are the balance constraints in the
forward and reverse direction of the distribution and hybrid centers, ALp ′ not ≤ M × Wn ∀ p′, t , n, o (45)
respectively. Constraint (22) is the balance constraint of collection
centers. Constraint (23) is to restrict the sum of the collected used
products. 3.2.3.4. CRM constraint. Constraint (46) calculates the number of new
products that the SC must yield for free to customers who return their
3.2.3.2. Capacity constraints. The following constraints are to define used products to the chain if option A is activated.
and apply capacities of facilities. ∑k AFpmkt + ∑j AGpmjt + ∑i AHpmit
FFpmt = ⎢
⎢ β
⎥ ∀ p, m, t
⎥
Qplt ≤ CAPpls ∀ p , t , l, s (24) ⎣ ⎦ (46)

∑p ′ Q′ p ′ nt ≤ CNns × Wn ∀ t , n, s (25) 3.2.3.5. Logical constraints. Constraints (47) and (48) impose the binary
and non-negativity restriction on the corresponding decision variables.
∑p ∑m AGpmjt ≤ MXCj × Yj ∀ j, t (26)
Xi , Yj, Zk , Wn, OA, OB, OC , OD , OE , OF ∈ {o, 1} ∀ i, j, k , n (47)
∑p ∑m AGpmjt ≥ MNCj × Yj ∀ j, t (27) Qplt , Q′ p ′ nt , ABplit , ACplkt , ADpimt , AEpkmt , AFpmkt , AGpmjt ,
∀ p , p′ , t , i , j , k , l , m , n , o , s
AHpmit , AIpjnt , AJpint , AKpknt , ALp ′ not , INpts , BOmpts , FFpmt ≥ 0
∑p ∑l ACplkt ≤ XCFk × Zk ∀ k , t (28) (48)

∑p ∑l ACplkt ≥ NCFk × Zk ∀ k , t (29)

3.2.4. Linearization
∑p ∑m AFpmkt ≤ XCRk × Zk ∀ k , t Clearly, the first objective function is non-linear in term (6). To
(30)
linearize this term, a non-negative auxiliary variable is introduced as
FOApmt = FFpmt × OA and the following constraints are added to the
∑p ∑m AFpmkt ≥ NCRk × Zk ∀ k , t (31) original model.
∑p ∑l ABplit ≤ UFi ∀ i, t (32) FOApmt ≥ FFpmt − M (1 − OA) ∀ p , m , t (49)

∑p ∑m AHpmit ≤ URi ∀ i, t FOApmt ≤ FFpmt + M (1 − OA) ∀ p , m , t (50)

(33)

Constraints (24) and (25) ensure that the total amount of products FOApmt ≤ M × OA ∀ p , m , t (51)
processed in each manufacturing and recycling plant does not exceed
FOApmt ≥ 0,integer ∀ p , m , t (52)
the corresponding capacity limit of each facility under each scenario,
respectively. Eqs. (26) and (27) are the maximum and minimum ca- Proof: Two states are imaginable for FOApmt:
pacity constraints for opening collection centers. For opening hybrid (i) If OA = 0, then FOApmt = 0. In this case, we have
centers, maximum and minimum capacity constraints are considered
FOApmt ≥ FFpmt − M
for both the forward and reverse directions through Constraints
(28)–(31). Since it is assumed that the existing distribution centers can FOApmt ≤ FFpmt + M
be changed into hybrid ones, only maximum capacity constraints in the
forward and reverse flows, as presented in Constraints (32) and (33), FOApmt ≤ M × 0.
are applicable.
Since FFpmt is a positive integer variable, it clearly takes zero.
(ii) If OA = 1, then FOApmt=FFpmt. In this case, we have
3.2.3.3. Shipping-linking constraints. In order to preserve the
consistency and integrity of the model regarding the network links FOApmt ≥ FFpmt
and shipping, the following constraints are considered. Therefore,
FOApmt ≤ FFpmt
Constraints (34)–(45) ensure that there is no shipping between any
non-linked locations. FOApmt ≤ M × 1.
ACplkt ≤ M × Zk ∀ p , t , l, k (34) In this situation, it is clear that FOApmt=FFpmt.
Obviously with the definition of the auxiliary variable, the non-
AEpkmt ≤ M × Zk ∀ p , t , m , k (35) linear part of the first objective function is changed to:

AFpmkt ≤ M × Zk ∀ p , t , m , k (36) − ( ∑ ∑ ∑ FOApmt × PPpt ) − (COB × OB ) − (COC × OC )

t p m
AGpmjt ≤ M × Yj ∀ p , t , m , j (37) − (COD × OD) − (COE × OE ) − (COF × OF ) (53)

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4. Solution procedure
To solve the proposed scenario-based model presented in Section
3.2, a two-phase procedure is utilized. The model is adapted to an
equivalent robust counterpart in the first phase. A revised multi-choice
goal programming method (RMCGP) is used for obtaining an efficient
solution in the second phase.
4.1. Step1: robust optimization
In this paper, the robust optimization is applied to deal with un-
certainty because of the advantages of the robust approach. More spe-
cifically, the SC design not only has to be aligned with the expected
conditions, but also has to be robust and flexible enough to adjust to the
inherent changes emerging in uncertain future realizations. Robust
solutions allow for flexibility to enable stable performance of the SC
under uncertain conditions. The robust optimization is an operation
research framework that deals with uncertainties in generic optimiza-
tion problems and finds robust solutions to these problems (Paixao and
Souza, 2015). More specifically, it is possible to encompass service-level
or decision-makers’ (DMs’) risk aversion function by means of the ro-
bust optimization approach, which was first introduced by Mulvey et al.
(1995) and also to attain a series of solutions that are progressively less
sensitive to the realizations of the data in a scenario set. For the men-
tioned reasons, robust optimization is used in this study rather than a
more used approach called stochastic approach. In stochastic linear
programming, there is no use of penalty terms and stabilizing the so-
lution over a period of time is not possible; it just simply minimizes the
expected cost or maximizes the expected profit.
The optimal solution acquired by a robust optimization model is
called robust if the solution remains ‘close’ to optimal after changing
the input data. This is known as solution robustness. Furthermore, the
model robustness becomes important when a solution is ‘almost’ fea-
sible for small changes in the input data. The robust optimization model
structure is as follows:
S S S
Min∑s = 1 ps × ξs + λ × ∑s = 1 ps × [(ξs − ∑s ′= 1 ps ′ ξs ′) + 2θs ]
s. t .
S
ξs − ∑s′= 1 p s′ × ξ s′ + θs ≥ 0
θs ≥ 0
where ξs is the minimization objective function in the original optimi-
zation problem. For more detailed information, the works of Mulvey
and Ruszczyński (1995); Mulvey et al. (1995) and Leung et al. (2002)
are recommended.
By focusing on robust optimization, the robust counterpart of the
proposed scenario-based model presented in Section 3.2 can be for-
mulated. In this model, the parameters Dmpts, Dʹoptʹs, CAPpls, and CNns
vary in a given uncertainty set S. The following parameters should also
be added to the presented model.
ps Probability of occurrence scenario s
W1 Penalty of one unit under-fulfillment of demand of product p in
the forward direction
W2 Penalty of one unit under-fulfillment of demand of recycled
product p′ in the backward direction
W3 Penalty of leakage capacity for producing of product p
W4 Penalty of leakage capacity for producing of recycled product p′
The control variables of the model are as follows:
δ1mpts The under-fulfillment of demand of product p for customer m
in period t under scenario s
δ2op′ts The under-fulfillment of demand of product p for customer o
in period t under scenario s
δ3pls The under-fulfillment of capacity for producing product p at
plant l under scenario s
δ4ns The under-fulfillment of capacity for producing at recycling
plant n under scenario s

Min cTx + dTx

Due to the uncertain parameters explained above, only the first
s.t. Ax = b objective function, which is maximizing the total profit, is subject to
i + Cy = i uncertainty. Therefore, in the robust counterpart of the model, the
second and third objective functions (10) and (11) are considered with
x,y ≥ 0 no changes. However, the first objective is as follows:
where the coefficient A is the matrix of certain parameters and x is a
⎡ ⎤
vector of design variables. Moreover, coefficients B and C are the ma- Minf ′1 = − ∑ Ps × f1s + λ ∑ Ps ⎢ (f1s − ∑ Ps × f1s ) + 2θs⎥
trices of noisy parameters and y is the vector of control variables. s s ⎣ s ⎦
In a scenario-based approach, we have a set of scenarios Ω=[1,2, + W1 × ∑ ∑ ∑ ∑ Ps × δ1mpts
…,S], in which each scenario is associated with a set of control con- m p t s

straints [ds, Bs, Cs, es] and a probability of occurrence ps where ob- + W2 × ∑ ∑ ∑ ∑ Ps × δ 2op ′ ts + W3 × ∑ ∑ ∑ Ps × δ3pls
viously Σ Ps = 1. Based on the above standard problem, the robust o p′ t s p l s
optimization problem can be formulated as below: + W4 × ∑ ∑ Ps × δ 4ns
n s (54)
Min σ(x,y1,y2,y1,…,ys) + ωp(δ1,δ2,…,δs)
Since our first original objective function f1s is to be maximized, in
s.t.
order to replace that as ξs, which is to be minimized as mentioned
Ax = b above, the term ∑s ps × f1s is written with a negative sign in (54).

Bs x + Cs v + δs = es ∀ s ∑m BOmpts = ∑m Dmpts − (∑i ∑m ADpimt + ∑k ∑m AEpkmt ) ∀ p , t , s

+ ∑m BOmpt − 1s + δ1mpts
x, y ≥ 0 ∀ s
(55)
The second term of the above objective function preserves the ∑n ALp ′ not ≤ D′op ′ ts + δ 2op ′ ts ∀ p′, o, n, s (56)
model robustness and considers the fact that with a set of input para-
meters under some scenarios, infeasible results may be obtained. In the Qplt ≤ CAPpls + δ 3pls ∀ p , t , l, s (57)
above problem, ω is the infeasibility weight of a scenario. For the first
term of the objective function mentioned above, Leung et al. (2002)
∑p ′ Q′ p ′ nt ≤ (CNns + δ 4ns) × Wn ∀ t , n, s (58)
presented a much more applicable formulation as follows:

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n
f1s − ∑s Ps × f1s + θs ≥ 0 ∀ s (59) Min∑i = 1 [ωi (di+ + di−) + ρi (ei+ + ei−)]
s. t .
hk (X ) = (≤or ≥ ) k = 1, 2, ..., q
θs , δ1mpts , δ 2op ′ ts , δ 3pls , δ 4ns ≥ 0 ∀ p , p , t , l, m , n, s (60)
fi (X ) − di+ + di− = Ri i = 1, 2, ..., n
All the constraints (13)–(52) described for the presented scenario- Ri − ei+ + ei− = gi .max i = 1, 2, ..., n
based model in Section 3.2 are considered in the robust counterpart in gi .min ≤ Ri ≤ gi .max i = 1, 2, ..., n
the same form, except for (14), (16), (24), and (25) that are changed
di+, di−, ei+, ei− ≥ 0 i = 1, 2, ..., n
into (55)–(58), respectively. Constraint (59) is for the linearization of
the objective function, which is defined in the work of Leung et al. where
(2002). Finally, Equation (60) imposes the variables as positive real gi.max: the upper bound of the ith aspiration level
numbers. gi.min: the lower bound of the ith aspiration level
Ri: the continuous variable with a range of gi.min≤ Ri≤ gi.max,
−
d+
i and di are positive and negative deviations from |fi (X )−Ri|
4.2. Step2: multi-objective methodology: RMCGP ωi: the weight of the ith goal
For the first case:
The goal programming (GP) is a vital technique for decision-makers −
e+
i and ei : positive and negative deviations from |Ri−gi.max |
to solve multi-objective decision-making (MODM) problems in ρi: the weight of the sum of deviations of |Ri−gi.min|
achieving a set of satisfying solutions. Charnes and Cooper (1957) first For the second case:
introduced the GP; a standard model of GP can be shown as follows: −
e+
i and ei : positive and negative deviations from |Ri−gi . i|

n
ρi : the weight of the sum of deviations of |Ri−gi.max |
Min∑i = 1 ωi (di+ + di−) According to the multi-objective methodology mentioned above, the
s. t . objective function of the RMCGP form of the proposed model is as
fi (X ) − di+ + di− = bi i = 1, 2, ..., n follows:
hk (X ) = (≤or ≥ )0 k = 1, 2, ..., q
ω1 ρ1
di+, di− ≥ 0 i = 1, 2, ..., n Minf4 = ⎜⎛ ⎞ + −
⎟ (d1 + d1 ) + ⎜
⎛ ⎞ + −
⎟ (e1 + e1 )
g
⎝ 1. max − g1. min ⎠ ⎝ 1. max − g1. min ⎠
g
ω2 ρ2
where + ⎜⎛ ⎞ + −
⎟ (d 2 + d 2 ) + ⎜
⎛ ⎞ + −
⎟ (e2 + e2 )
fi(X): goal constraint i g
⎝ 2. max − g2. min ⎠ ⎝ 2. max − g2. min ⎠
g
hk(X): system constraint k ω3 ρ3
ωi: the weight of the ith goal + ⎜⎛ ⎞ + − ⎛
⎟ (d3 + d3 ) + ⎜
⎞ + −
⎟ (e3 + e3 )

bi: the aspiration level of goal i ⎝ g3. max − g3. min ⎠ ⎝ g3. max − g3. min ⎠
− (61)
d+i and di : positive and negative deviations from the target value of
goal i, respectively, which Including the constraints of the robust counterpart, the following
new constraints emerge in the RMCGP form as explained earlier in this
b − fi (X ) iffi (X ) < bi section:
di− = ⎧ i
⎨
⎩0 otherwise
f ′1 − d1+ + d1− = R1 (62)
f (X ) − bi iffi (X ) > bi
di+ = ⎧ i
⎨
⎩0 otherwise R1 − e1+ + e1− = g1. min (63)

The standard GP technique emphasizes obtaining a solution next to g1. min ≤ R1 ≤ g1. max (64)
the aspiration level for every single objective function and imposes a
penalty on the deviation away from the aspiration level. However, in f2 − d 2+ + d2− = R2 (65)
practice, the DM usually selects a conservative initial aspiration level
based on the limited resource and available information. Hence, Chang R2 − e2+ + e2− = g2. max (66)
(2007) proposed a new method of the MCGP for the MODM with
multiple aspiration levels, which allows the DM to set multi-choice g2. min ≤ R2 ≤ g2. max (67)
aspiration levels for objective functions. Afterwards, Chang (2008) ex-
tended the MCGP to the RMCGP as the following two cases. f3 − d3+ + d3− = R3 (68)
The first case: ‘The less the better’ is expressed as:
R3 − e3+ + e3− = g3. min (69)
n
Min∑i = 1 [ωi (di+
+ + di−) + ρi (ei+ ei−)]
g3. min ≤ R3 ≤ g3. max (70)
s. t .
hk (X ) = (≤or ≥ )0 k = 1, 2, ..., q d1+, d1−, e1+, e1−, d 2+, d 2−, e2+, e2−, d3+, d3−, e3+, e3− ≥ 0 (71)
fi (X ) − di+ + di− = Ri i = 1, 2, ..., n
Six sub-problems with individual objective function can be solved to
Ri − ei+ + ei− = gi .min i = 1, 2, ..., n
find gi.max and gi.min, in which:
gi .min ≤ Ri ≤ gi .max i = 1, 2, ..., n g1.min can be found by Min f′1
di+, di−, ei+, ei− ≥ 0 i = 1, 2, ..., n g1.max can be found by Max f′1
g2.min can be found by Min f2
The second case: ‘The more the better’ is expressed as: g2.max can be found by Max f2
g3.min can be found by Min f3
g3.i can be found by Max f3
The DM is provided by the solutions to these sub-problems.
Consulting with experts, she/he makes decisions about the parameters.

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M. Yadollahinia et al.
Fig. 3. The existing SC network.
5. Case study
As mentioned in the previous sections, the proposed model is based
on a real-world problem and attempts to improve an existing forward
SC in the tire industry, design the reverse structure of the SC with the
aim of collecting and recycling waste tires, and coordinate the whole SC
under uncertainty while considering the CRM concept.
5.1. Description and input data
The existing forward tire SC network considered in the case study is
illustrated in Fig. 3. A manufacturing plant in Tehran and two dis-
tribution centers, one in Tehran and one in Isfahan, are operating. Eight
cities across the country are considered as main customer-located areas.
According to a report by the Iran Ministry of Mining and Industry,
the number of people per car is about 9 while the number of people per
scrap is about 6 in Iran (Dehghanian and Mansour, 2009). In other
words, 3.6 kg of scrap tire is produced per capita per year. This amount
is equivalent to 15 million tires, which translates to 60 thousands tons
of scrap based on the current population of the country. This amount is
expected to grow 0.02% annually. Currently, less than one third of the
produced waste tires in Iran are being recycled. This shows that tire
recycling industry is a new and emerging industry in this country.
In the described supply chain network, potential candidates for fa-
cility locations are chosen from populated cities because they are the
main points of scrap tire production. For collection centers, Tehran and
Isfahan, for hybrid centers, Isfahan and Mashhad, and for recycling
plans, Tehran and Isfahan are selected. Eight main nodes for forward
direction customers and three main nodes for backward direction cus-
tomers are considered. Two kinds of products, in each forward/back-
ward flow, are considered; in the forward direction, car and truck tires
and in the backward direction, crumb rubber and steel flow. Processing
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Resources, Conservation & Recycling 138 (2018) 215–228
1 ton of scrap tires gives 0.6 tons of crumb rubber (Dehghanian and
Mansour, 2009). Considering the approximate weight of a tire equal to
4 kg and using the aforementioned matrix MMp′, it is possible to convert
the forward flow, which is expressed in numbers, to the backward flow,
which is expressed in tons.
MMp ́ = 0.004[0.6 0.4] = [0.0024 0.0016]
In our case, a planning horizon of two time periods, each re-
presenting one year, is considered. Fixed opening costs for the facilities
are depicted in Table 1. The dynamic prices and costs of the chain are
illustrated in Table 2. The weight of the goals and costs of the CRM
options are displayed in Table 3. As mentioned before, the cost of op-
tion A is not predefined and is calculated in the model by COA =
FFpmt× PPpt.
Three scenarios are defined and indexed as 1, 2 and 3, which re-
present pessimistic, moderate, and optimistic situations, respectively.
Each of the scenarios represents a different situation reflecting varia-
tions in demand and capacities of the plants. It is assumed that by some
low cost efforts such as eliminating idle times of facilities, the capacity
of the manufacturing and recycling plants can be expanded to some
extent. Scenario number 3 represents the optimistic scenario because
under this scenario, capacities of the demand and plants are at max-
imum, which translate to higher earnings for the chain. The demand in
Table 1
Fixed Opening Costs for the Facilities (in 10,000 Rials).
Facility type Place 1 Place 2
Distribution centers 50,000 30,000
Collection centers 7000 6000
Hybrid centers 80000 85000
Recycling plants 350000 320000
M. Yadollahinia et al. Resources, Conservation & Recycling 138 (2018) 215–228

Table 2 Table 5
The Prices and Costs of the Chain (in 10,000 Rials). Demand in the Backward Direction (in thousands).
t1 t2 t1 t2

Parameter p1 P2 P1 P2 s1 s2 s3 s1 s2 s3

PCpt 90 200 100 250 Customer type3 p′1 p′2 p′1 p′2 p′1 p′2 p′1 p′2 p′1 p′2 p′1 p′2
RCp′t 400 400 500 500
HHplt 10 11 12 13 o1 9 5 10 6 11 7 9.1 5.1 10.1 6.1 11.1 7.1
CBOpt 50 70 60 80 o2 5 3 6 4 7 5 5.1 3.1 6.1 4.1 7.1 5.1
TDpt 0.010 0.015 0.015 0.020 o3 3 2 4 3 5 4 3.1 2.1 4.1 3.1 5.1 4.1
TRpt 0.005 0.010 0.010 0.015
TOp′t 1 1.5 1.5 2
PPpt 90 200 100 250
Table 6
PAp′t 400 400 500 500
Uncertainty in Capacity (in thousands).
s1 s2 s3
Table 3
Parameter Data Setting (in 10,000 Rials). Parameter p1 p2 p1 p2 p1 p2

Parameter Value parameter value CAPpls 3500 1000 3600 1100 3700 1200
CNns 19 15 20 16 21 17
COB 1000 ω1 50
COC 300 ω2 400
COD 150 ω3 50
Table 7
COE 170 ω4 500
COF 1200
Capacity of Distribution, Collection and Hybrid Centers (in thousands).
Parameter Place 1 Place 2

the forward and backward directions and uncertainty in the capacity of MXCj 5000 4000
MNCj 3000 2000
the manufacturing and recycling plants are shown in Tables 4–6, re-
XCFk 1000 900
spectively. Table 7 shows the maximum and minimum capacity of the NCFk 800 700
distribution, collection and hybrid centers. XCRk 6000 4000
NCRk 4000 3000
UFi 3000 3000
5.2. Computational results URi 3000 3000

The proposed model is implemented by Lingo 9 software package

−
and solved by the branch-and-bound method. The main results are satisfied since the deviations from the first goal (d+
1 , d1 ) are zero. Due

presented below. The optimal SC network obtained by the model is il-
lustrated in Fig. 4, showing that in the optimal solution, a collection
center in Tehran, a hybrid center in Mashhad and two recycling plants
in the two candidate locations, i.e. Tehran and Isfahan, are opened.
Furthermore, the optimal solution indicates that it is profitable to alter
the existing distribution centers into hybrid ones rather than opening
new collection or hybrid centers because in the optimal solution, both
the distribution centers are transformed into hybrid ones.
The DM is provided by the solutions of the sub-problems gi.min and
gi.max, as explained in Section 4.2. These results are shown in Table 8
and the deviations are listed in Table 9. The quantity of the profit ob-
jective function over each scenario (f1s), expected profit, quantity of the
objective functions in the robust counterpart model, i.e. f1‫׳‬,f2,f3, and
optimal minimization objective function in the goal programming
model (f4) are reported in Table 10.
From the results, it can be implied that the first objective is fully
to the tradeoff between profit and customer satisfaction, the model
decided to activate all the CRM options defined in Section 3, except for
option A as shown in Table 11. Moreover, the optimal quantity of
products manufactured in the manufacturing plant and the recycled
products produced in recycling plants in each time period are presented
in Table 12.
5.3. Sensitivity analysis
In this section, sensitivity analyses on important parameters of the
proposed model are conducted in order to provide managerial insights.
First, β, the number of used products that should be provided by cus-
tomers so that they can receive a free new product in one of the CRM
options (A). In the computational results in Section 5.2, with β = 16,
the model decided not to activate Option A. In order to find the value of
β for which the model decided to activate Option A and the

Table 4
Demand in the Forward Direction (in thousands).
t1 t2

s1 s2 s3 s1 s2 s3

Customer p1 p2 p1 p2 p1 p2 p1 p2 p1 p2 p1 p2

m1 1000 200 1100 250 1200 300 1020 204 1122 255 1224 306
m2 300 100 350 150 400 200 306 102 357 153 408 204
m3 300 100 350 150 400 200 306 102 357 153 408 204
m4 200 80 250 90 300 100 204 95 255 91.8 306 102
m5 300 100 350 150 400 200 306 102 357 153 408 204
m6 200 100 250 150 300 200 204 102 255 153 306 204
m7 200 150 250 200 300 250 204 155 255 204 306 255
m8 200 80 250 90 300 100 204 95 255 91.8 306 102

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M. Yadollahinia et al. Resources, Conservation & Recycling 138 (2018) 215–228

Fig. 4. The optimal SC network.

Table 8 Table 12
The Upper/Lower Bound of the Aspiration Levels. Optimal Quantity of Production in Manufacturing and Recycling Plants.

g1. min=0.2452637E+10 g1. max = 0.3188428E + 10 t1 t2

g2. min = 0.03 g2. max = 0.07
g3. min = 8500 g3. max = 0.2E + 9 Qplt Tehran p1 3700,000 3700,000
p2 1200,000 1200,000
Q′ p′nt Tehran p′1 19,212 19,209
p′2 12,808 12,806
Table 9 Isfahan p′1 21,612 21,609
Deviations. p′2 14,406 14,408

d1+ = 0 d1− = 0 e1+ = 10096 e1− = 0

d2+ =0 d2− = 0.0166 e2+ =0 e2− = 0
e3− = 0
consequences of activating this option, the model was run with various
d3+ = 1400 d3− = 0 e3+ =0
values of β. Finally, it was observed that the smallest value for this
parameter for which the model decided to activate Option A was 20. At
β = 20, the amount of total profit increased significantly to 275945200,
Table 10
Optimal Solutions of Objective Functions and Expected Profit (in 10,000 Rials). showing an approximate 12.5% growth. Besides that, there was a great
change in the customer satisfaction objective function raising from
f1s if s = 1 203570,000 f ′1 245263,700
0.05333 to 0.06667, which showed an approximate 25% growth. It is
f1s if s=2 202683,200 f2 0.05333
obvious that based on this analysis, DMs or senior managers of the SC
f1s if s=3 195272,000 f3 9900
expected profit 201052,100 f4 0.1666 are able to assign a more appropriate value for the mentioned para-
meter.
As described in Section 4.2, in the MCGP model, ωi is a parameter
Table 11 that shows the weight of positive and negative deviations from the goal
Activated and Non-Activated CRM Options. value of objective function i. These parameters are designated by DMs
Option A 0 Option D 1
and directly affect the optimal solution. Therefore, DMs or senior
Option B 1 Option E 1 managers of the SC should assign appropriate parameters as coefficients
Option C 1 Option F 1 for every single objective function cautiously. That is why in this paper,
the effect of different weights of each objective function on the mini-
mization objective function in the goal programming model (f4) is in-
spected in order to help DMs in assigning these weights in a way to

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M. Yadollahinia et al.
Fig. 5. The effect of changing ω1 on f4.
Fig. 6. The effect of changing ω2 on f4.
Fig. 7. The effect of changing ω3 on f4.
Fig. 8. Expected profit in the scenario-based model vs. the robust counterpart.
reach the minimum deviations from the target value. To do so, by
changing the values of the deviation weight for the first objective, i.e.
ω1, in the interval (0,1), the deviations from the goals (f4) are calculated
and depicted in Fig. 5. Similarly, the effect of changing ω2 and ω3 on f4
is displayed in Figs. 6 and 7, respectively.
As shown in Figs. 5–7, the magnitude of deviations from the goals
reaches its corresponding maximum values when the value of ω1 is less
than 0.25, value of ω2 is more than 0.9, and value of ω3 is either less
than 0.25 or more than 0.75. This can help DMs and senior managers of
the SC to assign much more appropriate weights to each objective in
order to minimize the deviations from the goals. The amount of the
expected profit in the scenario-based model depends on the scenario
that takes place. This is illustrated in Fig. 8 where each of the three
scenarios is considered to occur with the probability of 0.25, 0.5, and
0.25, respectively. However, the robust counterpart assures that re-
gardless of the scenarios, the expected profit is optimized.
227
Resources, Conservation & Recycling 138 (2018) 215–228
6. Conclusions and further research directions
In recent years, the field of reverse logistics has received more at-
tention from manufacturers from different economic, environmental
and political points of view. Accordingly, considering reverse supply
chains along with forward supply chains has become essential more
than ever. On the other hand, the ever-increasing amount of used tires
brings on serious environmental problems. In addition, the approach
followed to deal with used tires plays an important role in terms of
economic benefits, market demand, etc. In this regard, a comprehensive
and effective planning is needed to collect and recycle end-of-life tires
in an appropriate way.
These were the primary sources of motivation in this paper to pre-
sent a multi-objective, multi-period, multi-product MILP model under
uncertain demands and capacities for the tire industry. In the proposed
model, three objective functions of maximizing total profit, maximizing
customer satisfaction and minimizing distance between collecting fa-
cilities and customers were considered. In this study, the CRM concept
was innovatively incorporated into the SCM concept in order to have a
more customer-centric SC and thus enable the SC to survive and thrive
in the global competitive business environment. To achieve this, dif-
ferent CRM options were defined and the corresponding decisions were
modeled as binary variables considering their estimated costs. To solve
the proposed scenario-based model, it was converted to an equivalent
robust counterpart and a revised multi-choice goal programming
method was applied for obtaining an efficient solution with the three
objective functions of the model.
A case study of the tire industry was conducted including a manu-
facturing plant, two distribution centers and eight main customers in
the existing forward tire SC network. In this case, car and truck tires in
the forward flow and crumb rubber and steel in the backward flow were
considered. In the optimal SC network, obtained by the proposed
model, a collection center, a hybrid center and two recycling plants
were opened. From the obtained results, the first objective function was
fully satisfied. Moreover, sensitivity analysis showed that activating
Option A as a CRM action resulted in a 12.5 percent increase in the total
profit of the chain.
There are some potential future research directions, such as:
• The function that calculated the quantity of the total received used
products from the customers by means of considering customer sa-
tisfaction in the second objective function was assumed to be linear;
however, it can be approximated more accurately using interviews,
questionnaires and other data collection tools.
• In Option A of the CRM options, β could be considered as a decision
variable rather than a parameter.
• Uncertainty in other important parameters of the model can be
formulated.
• Attention must be given to other new and emerging recycling in-
dustries.
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