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

Byproducts and waste materials are potentially valuable inputs into a variety of industrial processes. Markets are being developed to capitalize on the use and reuse of these materials as inputs. The literature on reverse logistics analysis mostly concentrates on the end-of-life product recovery systems and mainly does not address the recovery process for waste/byproduct streams in an exchange network among industries. We have developed a reverse logistic model that minimizes the operational and environmental costs of exchanging waste and byproduct materials in a business-to-business network. The network contains firms, value-added process (VAP) centers (e.g., disassembly, recycling, or remanufacturing), disposal centers, and a virgin material market. The model takes the form of a mixed integer linear model. The model output contains the locations of the VAP centers and the material movement that minimizes the weighted sum of the operational and environmental costs. Because the problem is NP-hard, we developed a genetic algorithm (GA) to efficiently solve the model for large-sized problem instances. We demonstrated the modeling and solution approach for aluminum waste/byproducts in Los Angeles County. For this demonstration, we used data results from numerous past studies to assess the operational costs of waste/byproduct 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.