A Two Stage Stochastic Programming Model of the Price Decision Problem in the Dual-channel Closed-loop Supply Chain

In this paper, we propose a new model for designing integrated forward/reverse logistics based on pricing policy in direct and indirect sales channel. The proposed model includes producers, disposal center, distributers and final customers. We assumed that the location of final customers is fixed. First, a deterministic mixed integer linear programming model is developed for integrated logistics network design. Then, the stochastic counterpart of the proposed mixed integer linear programming model is developed by using scenario-based stochastic approach. We use the value of the stochastic solution (VSS) as a measure to evaluate the accuracy of stochastic programming approach. VSS value showed that using stochastic approach for solving the proposed model is sufficient. Moreover, we could obtain optimal values of sale prices in direct and indirect sale channel and service level by considering forward and reverse flow together.