The impact of freight discount on the design of a product recovery network

In this paper, we address the impact of freight discount on the design of the network considering product recovery. We consider two types of discounting methods namely: all unit discount and incremental unit discount. The freight discount is assumed to be applicable to the stage where products are transported in large quantities. We propose mathematical models incorporating freight discounts for a product recovery network that integrates both forward and reverse flow of products. The impact of various parameters, such as production capacity, warehouse/collection centre capacity, product returns, product recovery and discount rates, on network structure and quantities of product transported between facilities are discussed.

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