Sustainable Reverse Logistics for Distribution of Industrial Waste/By-Products: A Joint Optimization of Operation and Environmental Costs

By-products and waste materials are potentially valuable inputs into a variety of industrial processes. Markets are being aimed at capitalizing on the use and reuse of these materials as inputs. The literature on reverse logistics analysis mostly concentrates on the end-of-life products recovery systems and mainly does not address the recovery process for waste/by-products streams in an exchange network among industries. We developed a reverse logistic model that minimizes the operational and environmental costs of exchanging waste and by-product materials in a business-to-business network. The network contains firms, value added process centers (e.g. disassembly, recycling, or remanufacturing), disposal centers, and virgin material market. The model takes the form of a mixed integer linear model. The model output contains the locations of the value added process centers and the material movement that minimizes the weighted sum of the operational and environmental costs. Since the problem is NP-hard, we developed a Genetic Algorithm (GA) to efficiently solve the model for large problem instances. We demonstrated the modeling and solution approach for the aluminum waste/by-product in Los Angeles County. For this demonstration, we used data results from numerous past studies to assess the operational costs of waste/by-product collection, processing, and movement. To estimate the environmental costs and parameters, we utilized published economic input-output results from previous studies. This model can be used as a guide for policies to encourage the development of sustainable supply networks.