A cooperative negotiation embedded NSGA-II for solving an integrated product family and supply chain design problem with remanufacturing consideration

Product family design is a popular approach adopted by manufacturers to increase their product varieties in order to satisfy the needs of various markets. In recent years, because of increasing environmental concerns in societies and strict regulations of environmental protection, quite a number of manufacturers adopted remanufacturing strategy in their product development in response to the challenges. Remanufacturing of used products unavoidably involves a closed-loop supply chain system. To achieve the best outcomes, the supply chain design should be considered in product family design process. In this research, a multi-objective optimization model of integrated product family and closed loop supply chain design is formulated based on a cooperative game model for minimizing manufacturer's total cost and maximize suppliers’ total payoffs. Since the optimization problem could be a large- scale one and involves mixed continuous-discrete variables, a new version of nondominated sorting genetic algorithm-II (NSGA-II), namely cooperative negotiation embedded NSGA-II (NSGA-CO), is proposed to solve the optimization model. Simulation tests are conducted to validate the effectiveness of the proposed NSGA-CO. The test results indicate that the proposed NSGA-CO outperforms NSGA-II in solving various scale of multi-objective optimization problems in terms of convergence. With the formulated optimization model and the proposed NSGA-CO, a case study of integrated product family and supply chain design is conducted to investigate the effects of environmental penalty, quantity of demand and marginal cost of remanufacturing on used product return rate, manufacturers’ and suppliers’ profits and joint payoff.