A capacitated plant location model for Reverse Logistics Activities

Abstract

Product remanufacturing is one of the most profitable activities in reverse logistics. Running a business plan, in which companies take responsibility for the waste generated at their end-of-life products, involves making important strategic decisions. One of the challenges in planning the reverse flow of products is decide where installing the reprocessing facilities. This decision influences directly the transport variables costs and the facilities installation fixed costs. This paper proposes a model for the Capacitated Plant Location Problem in Reverse Logistics (CPL-RL), in which we assume that offered material in each collection center is aimed at a single facility for reprocessing. This restriction includes specific cases where there is no logistic availability in the network to send the collected material to different locations. The Mixed Integer Problem (MILP) is solved using an algorithm in two steps. In the first step, reduction tests are performed, which ones determine a priori which facilities are opened/closed. If all facilities are fixed opened or closed then the solution is optimal. Although not all facilities can have their status defined that way, the resultant problem has a less number of variables and it is solved using Benders method. The dataset was randomly generated and the results showed that the applied techniques are appropriate, achieving the optimal solution for all test problems.