A multi-objective facility location model to implement circular economy

Technological advances enable new business models that adopt the multiple lifecycle approach to design, manufacture and use of products. The Internet of Things (IoT) paradigm can facilitate implementing the Product Service Systems (PSS) model to achieve Circular Economy through closed-loop material flow. Implementing PSS in IoT-enabled environments will require a new approach to supply chain network design. PSS implementation requires more complex design of reverse logistics operations to enable reuse, remanufacture and recycle options for end-of-life (EoL) products. Therefore, establishing optimal location of facilities for these operations is critical to achieve efficiency and sustainability objectives. This study develops an approach for optimizing the locations of end-of-life product recovery facilities for implementing PSS. A multi-objective optimization model that considers social, environmental and economic criteria including lead time of reusable products which is the time between collection of EoL products and the time they reach secondary markets, as objectives is formulated considering relevant constraints. The proposed model is applicable to different sectors such as appliances or electronics manufacturing. The methodology is demonstrated by application to a case study of the Turkish appliance sector. Results from different scenarios are tested and evaluated to gain a better insight of implications due to location selection decisions.