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Locating collection centers for incentive-dependent returns under a pick-up policy with capacitated vehicles

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  • Aras, Necati
  • Aksen, Deniz
  • Gönül Tanugur, Ayse

Abstract

We address the problem of locating collection centers of a company that aims to collect used products from product holders. The remaining value in the used products that can be captured by recovery operations is the company's motivation for the collection operation. We assume that a pick-up strategy is in place according to which vehicles with limited capacity are dispatched from the collection centers to the locations of product holders to transport the returns. Each product holder has an inherent willingness to return, and makes the decision on the basis of the financial incentive offered by the company. The incentive depends on the condition of the returned item referred to as return type. We formulate a mixed-integer nonlinear facility location-allocation model to find both the optimal locations of a predetermined number of collection centers and the optimal incentive values for different return types. Since the problem is , we propose a heuristic method to solve medium and large-size instances. The main loop of the method is based on a tabu search method performed in the space of collection center locations. For each location set prescribed by tabu search, Nelder-Mead simplex search is called to obtain the best incentives and the corresponding net profit. We experiment with different quality profiles when there are two and three return types, and observe the effect of the uniform incentive policy (UIP) in which the same incentive is offered to product holders regardless of the quality of their returns. We conclude that the UIP is inferior to the quality-dependent incentive policy resulting in a higher profit loss when the proportion of lowest quality returns is relatively high.

Suggested Citation

  • Aras, Necati & Aksen, Deniz & Gönül Tanugur, Ayse, 2008. "Locating collection centers for incentive-dependent returns under a pick-up policy with capacitated vehicles," European Journal of Operational Research, Elsevier, vol. 191(3), pages 1223-1240, December.
  • Handle: RePEc:eee:ejores:v:191:y:2008:i:3:p:1223-1240
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    References listed on IDEAS

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    1. Rosing, K. E. & ReVelle, C. S. & Rolland, E. & Schilling, D. A. & Current, J. R., 1998. "Heuristic concentration and Tabu search: A head to head comparison," European Journal of Operational Research, Elsevier, vol. 104(1), pages 93-99, January.
    2. Min, Hokey & Jeung Ko, Hyun & Seong Ko, Chang, 2006. "A genetic algorithm approach to developing the multi-echelon reverse logistics network for product returns," Omega, Elsevier, vol. 34(1), pages 56-69, January.
    3. Fleischmann, Mortiz & Krikke, Hans Ronald & Dekker, Rommert & Flapper, Simme Douwe P., 2000. "A characterisation of logistics networks for product recovery," Omega, Elsevier, vol. 28(6), pages 653-666, December.
    4. Jayaraman, Vaidyanathan & Patterson, Raymond A. & Rolland, Erik, 2003. "The design of reverse distribution networks: Models and solution procedures," European Journal of Operational Research, Elsevier, vol. 150(1), pages 128-149, October.
    5. Saibal Ray & Tamer Boyaci & Necati Aras, 2005. "Optimal Prices and Trade-in Rebates for Durable, Remanufacturable Products," Manufacturing & Service Operations Management, INFORMS, vol. 7(3), pages 208-228, January.
    6. V. Daniel R. Guide, Jr. & Ruud H. Teunter & Luk N. Van Wassenhove, 2003. "Matching Demand and Supply to Maximize Profits from Remanufacturing," Manufacturing & Service Operations Management, INFORMS, vol. 5(4), pages 303-316, October.
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    Citations

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    Cited by:

    1. Jeihoonian, Mohammad & Kazemi Zanjani, Masoumeh & Gendreau, Michel, 2017. "Closed-loop supply chain network design under uncertain quality status: Case of durable products," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 470-486.
    2. Melo, M.T. & Nickel, S. & Saldanha-da-Gama, F., 2012. "A tabu search heuristic for redesigning a multi-echelon supply chain network over a planning horizon," International Journal of Production Economics, Elsevier, vol. 136(1), pages 218-230.
    3. Rahman, Shams & Subramanian, Nachiappan, 2012. "Factors for implementing end-of-life computer recycling operations in reverse supply chains," International Journal of Production Economics, Elsevier, vol. 140(1), pages 239-248.
    4. repec:gam:jsusta:v:10:y:2018:i:8:p:2799-:d:162413 is not listed on IDEAS
    5. Aksen, Deniz & Aras, Necati & Karaarslan, Ayse Gönül, 2009. "Design and analysis of government subsidized collection systems for incentive-dependent returns," International Journal of Production Economics, Elsevier, vol. 119(2), pages 308-327, June.
    6. Jeihoonian, Mohammad & Kazemi Zanjani, Masoumeh & Gendreau, Michel, 2016. "Accelerating Benders decomposition for closed-loop supply chain network design: Case of used durable products with different quality levels," European Journal of Operational Research, Elsevier, vol. 251(3), pages 830-845.
    7. Keyvanshokooh, Esmaeil & Ryan, Sarah M. & Kabir, Elnaz, 2016. "Hybrid robust and stochastic optimization for closed-loop supply chain network design using accelerated Benders decomposition," European Journal of Operational Research, Elsevier, vol. 249(1), pages 76-92.
    8. Saeid Rezaei & Amirsaman Kheirkhah, 0. "A comprehensive approach in designing a sustainable closed-loop supply chain network using cross-docking operations," Computational and Mathematical Organization Theory, Springer, vol. 0, pages 1-48.
    9. repec:spr:comaot:v:24:y:2018:i:1:d:10.1007_s10588-017-9247-3 is not listed on IDEAS
    10. Küçükaydin, Hande & Aras, Necati & Kuban AltInel, I., 2011. "Competitive facility location problem with attractiveness adjustment of the follower: A bilevel programming model and its solution," European Journal of Operational Research, Elsevier, vol. 208(3), pages 206-220, February.
    11. Kaya, Onur, 2010. "Incentive and production decisions for remanufacturing operations," European Journal of Operational Research, Elsevier, vol. 201(2), pages 442-453, March.
    12. repec:spr:annopr:v:253:y:2017:i:1:d:10.1007_s10479-016-2347-5 is not listed on IDEAS
    13. Vahdani, Behnam & Tavakkoli-Moghaddam, Reza & Modarres, Mohammad & Baboli, Armand, 2012. "Reliable design of a forward/reverse logistics network under uncertainty: A robust-M/M/c queuing model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(6), pages 1152-1168.
    14. Wakolbinger, Tina & Toyasaki, Fuminori & Nowak, Thomas & Nagurney, Anna, 2014. "When and for whom would e-waste be a treasure trove? Insights from a network equilibrium model of e-waste flows," International Journal of Production Economics, Elsevier, vol. 154(C), pages 263-273.
    15. Cardoso, Sónia R. & Barbosa-Póvoa, Ana Paula F.D. & Relvas, Susana, 2013. "Design and planning of supply chains with integration of reverse logistics activities under demand uncertainty," European Journal of Operational Research, Elsevier, vol. 226(3), pages 436-451.

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