Reverse logistic network design problems involve strategic decisions which influence tactical and operational decisions. In particular, they involve facility location, transportation and inventory decisions, which affect the cost of the distribution system and the quality of the customer service level. Locating a collection centre is an important strategic decision, as purchasing or building facilities requires sizable investment; also the network transportation cost is affected by the selection of facility locations. The location that is selected must therefore take into account all the parameters and variables that are relevant and the decision may even affect demand.
In this paper, network design for reverse logistics is investigated to solve the End-of-life Vehicles (ELV) collection centres location problem. We start by giving an understanding of the process of this reverse logistics network design by considering the features of reverse logistics, the role of ELV management and use of optimization methods. Based on this, a reverse logistics network design case for collection of End-of-life Vehicles is presented by formulating the problem into a mixed-integer linear program (MILP), taking into consideration the Capacitated Facility Location Problem. The solution to this model is obtained using IBM CPLEX Optimization Studio©. In addition the applicability of the model in other reverse logistic networks is discussed and the subjects for further research are pointed out.
Whey reverse logistics network design: a stochastic hierarchical facility location model
