Modeling a Reverse Logistics Network for End of Life Vehicles Including Third-Party Provider

In theory, reverse logistics has the aspects of uncertainty on quantity, quality, time and place of returns and it is difficult to reach economies of scale for any individual manufacturer. Recently, third party reverse logistics is regarded as another alternative by automotive manufacturers. In this paper, a reverse logistics network entry by third party provider is proposed for the collection of End of Life vehicles. The problem is modeled through a capacitated facility location allocation problem and is formulated as MILP. The mathematical model minimizes total costs of the network from perspective of third party. For testing and validation of proposed model, a numerical example from Tehran’s current situation is considered and is solved by IBM ILOG Cplex 6.3