Lexicographic R* Criterion for Decision Making under Uncertainty in Reverse Logistics

Abstract

Reverse supply chains (RSC) deal with End-Of-Life products (EOL). They provide the benefits of reducing solid waste, creating new jobs, and generating income from the sales of re-manufactured products and savings in raw materials. At the same time, their design is more challenging in comparison with forward supply chains because of hardly predictable reverse flows of EOL products. Conventional approaches to address the uncertainty are usually risk-oriented and do not consider eventual opportunities. In order to overcome this drawback, we propose to use $R_*$ criterion in decision making process in a context of complete ignorance with a discrete set of equally possible scenarios. This criterion integrated in a new lexicographic algorithm is used in order to take the Decision-Maker's (DM) behavior into account in different ways regarding if the uncertainty is considered as a risk or as an opportunity. Its performances are evaluated on the case study of facility location problem in reverse logistics.