Abstract: Along with forward supply chain organization needs
to consider the impact of reverse logistics due to its economic
advantage, social awareness and strict legislations. In this paper, we
develop a system dynamics framework for a closed-loop supply
chain with fuzzy demand and fuzzy collection rate by incorporating
product exchange policy in forward channel and various recovery
options in reverse channel. The uncertainty issues associated with
acquisition and collection of used product have been quantified using
possibility measures. In the simulation study, we analyze order
variation at both retailer and distributor level and compare bullwhip
effects of different logistics participants over time between the
traditional forward supply chain and the closed-loop supply chain.
Our results suggest that the integration of reverse logistics can reduce
order variation and bullwhip effect of a closed-loop system. Finally,
sensitivity analysis is performed to examine the impact of various
parameters on recovery process and bullwhip effect.