A System Dynamics Approach for Capacity Planning and Price Adjustment in a Closed-Loop Supply Chain

In the recent years, there is a significant attention to closed-loop supply chain planning because of important business and environmental factors. Relevant literature shows that most of the researchers used mixed integer programming models (MIP) for closed-loop supply chain planning. Although MIP models are powerful tools for modeling and optimizing the design and planning of supply chains, but these models are unable to model the dynamics of such supply chains in planning problems. In this paper, a system dynamics model is developed to cope with the dynamics of closed-loop supply chains in capacity planning and price adjustment problems. To assess the performance and usefulness of the proposed model, the behavior of the model is analyzed through simulation. Normal parameter adjustment always can lead to proper and desired dynamic and static behaviors.