Abstract:
We consider the problem of collecting and processing waste material. At a production facility, a known amount of inventory is required for production (e.g., paper) for every period. Instead of new material, the facility relies on collected and processed waste material (e.g., paper waste). This material is collected from regional waste collection locations. The amount of waste material per location is uncertain, as is the quality of the collected waste, i.e., the resulting inventory when processing the material. If the inventory is insufficient at the end of a period, costly new material must be bought. Each period, decisions are made about how much waste material to collect from which location and how to route the collection vehicles accordingly. Ideally, inventory is built to hedge against quality uncertainty and to ensure efficient routing operations in future periods. We propose a stochastic lookahead method that samples a set of scenarios and solves a simplified two-stage stochastic program in every period. We show the value of our method for two case studies, one based on real-world data from Sachsen-Anhalt, Germany, and one from the literature with data from the United Kingdom. We further conduct a detailed analysis of our method and the problem characteristics. The results show that our method effectively anticipates all sources of uncertainty, reducing cost significantly compared to benchmark policies. This superior performance is due to appropriate state-dependent supplier selection that considers the percentage of material loss, available material, and routing cost for current and future periods.
