A collaborative framework for zero waste and circular supply chains solution in the circular economy

The waste problem caused by expired products in global supply chains, especially in the food industry, results in significant economic and environmental losses. Traditional supply chains models focus on linear product flows, but growing sustainability awareness demands more efficient management of expired products, including recycling and reuse. However, existing models often fail to effectively address coordination issues among supply chains participants, making it difficult to reduce these losses and improve profitability. This study proposes a coordination framework for a two-tiered circular supply chains, where manufacturers buy back expired products from distributors and recycle them into high-value-added secondary products, such as fertilizer or energy. We construct a profit-maximizing model under demand uncertainty, incorporating product buyback agreements to improve coordination between distributors and manufacturers, reduce disposal costs, and enhance profitability across the entire supply chains. We apply the proposed model to a case study in the dairy industry, where expired dairy products are converted into fertilizer. Analysis shows that the implementation of product buyback agreements significantly improves supply chains performance, enhancing profitability while minimizing environmental impact through the recycling of expired products. Our findings indicate that this approach can reduce total supply chains costs by 15 to 25% (the exact figure depends on product category and market conditions), and the recycling process is expected to save millions of dollars annually by transforming waste into useful products. This research enriches the relevant literature by proposing a comprehensive solution for managing expired products in the supply chains and providing a new application of circular economy (CE) principles through product buyback agreements.