A rolling horizon heuristic approach for a multi-stage stochastic waste collection problem

Abstract

In this paper we present a multi-stage stochastic optimization model to solve an inventory routing problem for the collection of recyclable municipal waste. The objective is the maximization of the total expected profit of the waste collection company. The decisions are related to the selection of the bins to be visited and the corresponding routing plan in a predefined time horizon. Stochasticity in waste accumulation is modeled through scenario trees generated via conditional density estimation and dynamic stochastic approximation techniques. The proposed formulation is solved through a rolling horizon approach, providing a rigorous worst-case analysis on its performance. Extensive computational experiments are carried out on small- and large-sized instances based on real data provided by a large Portuguese waste collection company. The impact of stochasticity on waste generation is examined through stochastic measures, showing the importance of adopting a stochastic model over a deterministic formulation when addressing a waste collection problem. The performance of the rolling horizon approach is evaluated, demonstrating that this heuristic provides cost-effective solutions in short computational time. Managerial insights related to different geographical configurations of the instances and varying levels of uncertainty are finally discussed.