Analysis of Reverse Logistics Model Considering Two Echelon Distribution Network and Drop Box Facilities

Abstract

Two-echelon distribution systems are an economically attractive system, whereby products originating from the depot can be distributed to or from a intermediate facility. In this case, the intermediate facility is considered as a drop box facility that is placed in a location that is easily accessible to the end customer. In addition, the use of drop box facilities can reduce costs incurred by shipping goods or material. The problem is addressed as an optimization model that formulated into an integer linear programming model denoted as the two-echelon vehicle routing problem with drop box facilities (2EVRP-DF). The objective is to minimize the cost of transportation with regards to the vehicle travelling cost, and the additional cost to compensate the customer that needs to travel to access the intermediate facilities. The aim of this study is to compare 2E-VRPDF model with the current practice (CP) whereas in this case the customer directly travel to the depot to drop their goods. At the end of this study shows the effectiveness of 2EVRP-DF by reducing transportation costs by 47.03% compared to current practice.