The Impact of Integrating Resource Collection into Location-Routing Problems

The proximity to resource and customer locations is among the most important criteria in site selection for manufacturing companies. For many applications, e.g., in the area of circular economy, companies must also take responsibility for collecting resources. In such scenarios, their operational planning involves selecting resource markets and generating both resource collection and customer delivery routes. While the Location-Routing Problem (LRP) integrates facility location and customer delivery routing, existing approaches do not fully account for resource collection routes. Recognizing this need, we introduce a novel integer mathematical programming model, the Location-Routing Problem with Resource Collection and Customer Delivery (LRP-RCCD). By integrating the LRP with the Multi-Depot Traveling Purchaser Problem (MDTPP), the LRP-RCCD minimizes operational and transportation costs while meeting customer demands. This unified framework simultaneously optimizes location decisions, market selection, resource procurement, resource collection, and customer delivery routes. We consider multiple resource types from markets with heterogeneous prices, making efficient selection and routing crucial. To investigate the value of integrating resource collection and customer delivery routes, we conduct computational experiments using exemplary test instances. We compare the results of considering only customer routes with simplified direct resource collection against those obtained using our integrated framework.