A strategic model for the closed-loop supply chain network design for omni-channel retailing

Abstract

The 'omni-channel' way is to provide a seamless shopping experience to the customers through the integration of product information and delivery through hybrid combination of physical and online channels. The paradigm shift from multi-channel to omni-channel has posed several implementation challenges. The key challenge is the design of supply chain network in an omni-channel paradigm which is addressed in this paper. We consider an omni-channel retail supply chain with the online, showroom and store channels for the product information and in-store pick-up/drop-off and home delivery/pickup as the product fulfilment/recovery channels. A mixed-integer programming (MIP) model is proposed to minimise the location and allocation costs. The model provides an optimal configuration of different facilities and demand allocation patterns in the omni-channel environment. The concept of the model is demonstrated with an illustrative example. A MIP-based mathematical heuristic is developed to solve the problem efficiently. The sensitivity of the model to key parameters is demonstrated with computational experiments and finally, a scenario-based robust optimisation model is also proposed to capture the uncertainty in various types of demands. © 2023 Inderscience Enterprises Ltd.