Selective multi-depot vehicle routing problem with pricing

• Published in: Transportation research. Part C, Emerging technologies Vol. 19; no. 5; pp. 866 - 884
• Main Authors: Aras, Necati, Aksen, Deniz, Tuğrul Tekin, Mehmet
• Format: Journal Article Conference Proceeding
• Language: English
• Published: Kidlington Elsevier India Pvt Ltd 01-08-2011; Elsevier
• Subjects: Acquisitions; Applied sciences; Charge; Collection; Durability; Exact sciences and technology; Ground, air and sea transportation, marine construction; Launches; Marketing; Pricing; Reverse logistics; Selective multi-depot vehicle routing; Tabu Search; Vehicles; Collection; Tabu Search; Selective multi-depot vehicle routing; Reverse logistics; Pricing; Vehicle routing problem; Freight transportation; Goods traffic; Case study; Tabu search; Forwarding; Formulation; Comparative study; Logistics
• ISSN: 0968-090X; 1879-2359
• DOI: 10.1016/j.trc.2010.08.003

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► A more profitable collection is achieved by not collecting all the available cores. ► Vehicle routing problem with profits is considered for the case of multiple depots. ► Pricing issue is incorporated into the vehicle routing problem with profits.
Firms in the durable goods industry occasionally launch trade-in or buyback campaigns to induce replacement purchases by customers. As a result of this, used products (cores) quickly accumulate at the dealers during the campaign periods. We study the reverse logistics problem of such a firm that aims to collect cores from its dealers. Having already established a number of collection centers where inspection of the cores can be performed, the firm’s objective is to optimize the routes of a homogeneous fleet of capacitated vehicles each of which will depart from a collection center, visit a number of dealers to pick up cores, and return to the same center. We assume that dealers do not give their cores back free of charge, but they have a reservation price. Therefore, the cores accumulating at a dealer can only be taken back if the acquisition price announced by the firm exceeds the dealer’s reservation price. However, the firm is not obliged to visit all dealers; vehicles are dispatched to a dealer only if it is profitable to do so. The problem we focus on becomes an extension of the classical multi-depot vehicle routing problem (MDVRP) in which each visit to a dealer is associated with a gross profit and an acquisition price to be paid to take the cores back. We formulate two mixed-integer linear programming (MILP) models for this problem which we refer to as the selective MDVRP with pricing. Since the problem is NP-hard, we propose a Tabu Search based heuristic method to solve medium and large-sized instances. The performance of the heuristic is quite promising in comparison with solving the MILP models by a state-of-the-art commercial solver.