European Journal of Operational Research 171 (2006) 1033–1050

www.elsevier.com/locate/ejor

Modeling reverse logistic tasks within closed-loop

supply chains: An example from the automotive industry
a,*
Frank Schultmann , Moritz Zumkeller b, Otto Rentz b

a
Institute for Management (IfM), University of Koblenz-Landau, Universitätsstrasse 1, D-56070 Koblenz, Germany
b
Institute for Industrial Production (IIP), University of Karlsruhe, Hertzstrasse 16, D-76187 Karlsruhe, Germany

Available online 10 March 2005

Abstract

In this contribution, the peculiarities of establishing a closed-loop supply chain (CLSC) are presented, based on an
example considering the end-of-life vehicle (ELV) treatment in Germany. Different design options for a CLSC are put
up, concentrating on how reverse material flows can be handled with regard to reintegrate them into their genuine sup-
ply chains. Reverse logistics aspects are modeled with vehicle routing planning. Introducing a problem-tailored algo-
rithm, results of several CLSC scenarios are discussed which are based on real case data, depicting measures from
German ELV stakeholders.

2005 Elsevier B.V. All rights reserved.

Keywords: Logistics; Environment; Scenarios; Closed-loop supply chains; Metaheuristics

1. Introduction to guarantee and finance product take-back and

Manufacturers will face completely new chal-
lenges in EU member state markets when their
products are subject to environmentally-driven
legislation of the European Community: due to
manufacturer responsibility, they will be obliged
*
Corresponding author. Tel.: +49 261 287 2853; fax: +49 261
287 100 2853.
E-mail address: schultmann@uni-koblenz.de (F. Schult-
mann).
URL: http://www.ipl.ifm.uni-koblenz.de (F. Schultmann).
recycling. In addition to environmental require-
ments on plant level, which are subject to the
ISO 14000 series, these regulations are setting
product-specific environmental goals for the prod-
uctsÕ end-of-life phase. An overview on ISO 14000
specifications and state-of-the-art is presented in
[9]. The tasks which are due to fulfill the new de-
mands comprise several different business and re-
search fields, as experiences with product-specific
take-back systems of this kind are few.
To address the challenges sketched, the case
of enhancing ELV recycling in Germany by

0377-2217/$ - see front matter
2005 Elsevier B.V. All rights reserved.
doi:10.1016/j.ejor.2005.01.016
1034 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
reprocessing selected material fraction is investi-
gated. Main elements of this example are the eval-
uation of network design concepts for separating
and reprocessing plastic ELV components, con-
centrating on reverse logistics aspects. Reverse
logistics modeling is done by vehicle routing plan-
ning using Tabu Search. Consequently, the foun-
dations needed in the fields of supply chain
theory, network design, and reverse logistics are
presented before application-related evaluations
are conducted and discussed.
The remainder of the paper is structured as fol-
lows: Section 2 comprises a brief introduction to
Supply Chain Management and enhancements to-
wards CLSC. In Section 3, the network specifica-
tions are presented, while the basic procedure for
tackling the reverse logistic task is introduced in
Section 4. Subsequently, an application-tailored
vehicle routing approach is presented in Section
5, while the procedure of scenario calculation is
demonstrated by comparing different alternatives
in Section 6. Also, scenario results are presented
and discussed prior to the outlook to further fields
of related research in Section 7.
2. From supply chains to closed-loop supply chains
Supply Chain Management (SCM) has been
extensively discussed as an approach to coordinate
production processes across company borders
(recently published contributions to SCM can
exemplary be found in [61,63]). However, no com-
monly accepted definition of the term ÔSupply
Chain ManagementÕ can be given, mainly because
this topic has been addressed by different economic
fields (a classification of SCM theories can be ob-
tained in [3]). Concentrating on the logistics per-
spective, SCM deals with the coordination of
transfer processes between the stakeholders of
product manufacturing. These transfer processes
comprise material, products, money, and informa-
tion [45,46].
Most SCM publications concern mainly pro-
curement and production, extending the concept
beyond the point of sale is rare. Recently, in-
creased need has been recognized to extend SCM
issues beyond the point of sale in industrial manu-
facturing. Hence, the research field of managing
supply chains has been enlarged by tasks referring
to the product utilization phase (e.g. service, main-
tenance, and others) and to the end-of-life phase
(e.g. product recovery, refurbishing or recycling).
Conceptually speaking, these additional tasks have
been complementing traditional supply chains to
CLSCs [12,51]. With regard to end-of-life issues,
there are two main different motivations for
companies to integrate this product life phase into
existing supply chains: profit-oriented motivation
and legal motivation. The framework for both
kinds of motivation is subject to the following
chapters. In addition to [34], who similarly distin-
guish product returns between a waste stream sys-
tem and a market-driven system, we consider that
legal motivation comprises the obligation to re-
cycle or reuse of the spent product or component.
In particular, manufacturers facing mandatory
product take-back also need to reprocess the prod-
uct or its material in order to reintegrate it into the
same or another production process. Conse-
quently, the possibility to collect and dispose spent
products which are not suitable for resale is not
taken into account, as some legislative acts con-
taining producer responsibility issues do not pro-
vide this option.
2.1. Profit-oriented motivation
According to product manufacturing, the first
motivation is driven by the possibility to resell
the product profitably: whenever a product is con-
sidered to have a significant market value after the
end of the first utilization phase, it may be profit-
able for the productÕs manufacturer to collect, up-
grade, and resell the product. Depending on the
product and its condition, upgrading may consist
of cleaning, repair, refurbishing, or cannibaliza-
tion and component reutilization [64]. Following
this avenue has already been proven to be success-
ful for products with short cycles of technological
innovation, i.e. copiers [41], especially when the
consumer market can be subdivided into different
demand levels (i.e. new technology/high price;
established technology/medium price; traditional
technology/low price) [42]. In these cases, spent
productsÕ acquisition mostly takes place when a
 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
customer replaces an existing product for a new
one. This product exchange can be supported by
the manufacturer by offering attractive conditions
for product trade-in, by identifying customer
needs during product service, or by further mea-
sures. Accordingly, product conditions are mostly
known and the possibilities for profitable resale
can be estimated quite well.
Triggered by this profit-oriented perspective,
intensive research has been focused on SCM and
reverse logistics, trying to modify supply chains
to form CLSCs [32,33,40,66]. Early theoretical
concepts and industry applications in these fields
are reported in comprehensive overviews [31,35].
A detailed survey of logistic network designs
for recovering spent products from different sec-
tors and quantitative models to support the design
of reverse logistic networks is also available
[19–21].
2.2. Legal motivation
Apart from profitability, the second motivation
for manufacturer-driven product take-back and
subsequent reprocessing is to fulfill legal require-
ments. Because of the increasing demands to fulfill
European and national legislations, managing the
flows of spent products has become a crucial con-
cern for manufacturers and importers of products.
Apart from the situation in Europe, examples can
be found where environmental concerns lead to
similar challenges in terms of product-specific
take-back obligations [60]. In some fields, recycling
of spent products is well established, mainly due to
the profitability of recovering secondary materials
from spent products. For example, in the pulp and
paper industry and the metal industry, the use of
scrap as a raw material for new products is routine
[54]. However, for other product groups which are
considered not to be recovered sufficiently, manu-
facturers have recently been forced to take respon-
sibility for taking back their spent products from
customer markets and guarantee proper recycling
for a significant fraction of the product. For in-
stance, the European Union has issued regulations
for electrical and electronic equipment [15,16], for
used cars [14], and for spent batteries [13]. To en-
sure a high environmental standard throughout
1035
Europe, this trend is still to be continued. As a
consequence, manufacturers have to cope with
the collection and recycling of their products even
if no further profit can be expected. In these cases,
regaining material from the spent products is pur-
sued rather than remanufacturing. In Germany,
the manufacturersÕ responsibility is to be exerted
for some applications already (i.e. for batteries
[24]), or realization is due soon (i.e. for cars [26]).
For some of these fields of application, studies to
evaluate possible strategies for collection and
recycling have already been carried out [53,
57–59,62,71]. In contrary to the profit-oriented
avenue, manufacturers face some substantial dif-
ferences considering product collection and
reprocessing:
• As providing a free-of-charge product return
option is one central element of manufacturersÕ
responsibility, a recovery network needs to be
established which ensures sufficient area cover-
age (recovery network characteristics are dis-
cussed extensively in [19, p. 43ff]). Due to the
significant costs of establishing and maintaining
such a recovery network, collaborative plan-
ning of different manufacturers for a joint
take-back system is often advisable. Conse-
quently, the products returned are not only of
unknown condition and material composition,
but also representing multiple product brands.
Thus, hardly any detailed knowledge about the
products to be returned can be determined in
advance.
• Apart from the unknown composition of prod-
ucts, the productsÕ benefit consists of the mate-
rial content only, not of the productsÕ
functionalities. Hence, material recovery is the
only option to be realized, especially as energy
recovery and landfilling is limited to a small
weight percentage of the product only (exam-
ples for weight percentages to be recovered
from ELVs are stated in Section 3.2). Conse-
quently, the products need to be dismantled
and reprocessing techniques need to be applied
to regain the material for a secondary use. Since
manufacturersÕ responsibility is a relatively
young legal instrument, several technically elab-
orate reprocessing measures exist in laboratory
1036 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
scale only and still need to prove their suitabil-
ity for industrial-scale CLSCs.
• While product remanufacturing is primarily
done in order to maximize profit, product
take-back and reprocessing as required by legal
prescriptions is considered to be performed in a
cost-minimal way. Thus, objectives for estab-
lishing CLSCs differ by motivation.
Though several differences can be found be-
tween both types of CLSCs, no unambiguous dis-
tinction can be made between them. In most
applications, aspects of both profit-oriented and
legal motivations occur when enhancing a supply
chain. For example, the treatment of ELVs com-
prises component disassembly and resale (profit-
oriented motivation) as well as efforts for material
recycling of the vehicle remainder, since predefined
recycling quotas are to be fulfilled by the years
2006 and 2015, respectively (legal motivation) (cf.
Section 3.2). To achieve these goals, ELV plastic
components need to be reprocessed in addition
to the ferrous and non-ferrous materials.
3. Closed-loop supply chain planning for
end-of-life vehicle treatment
The following approach for designing CLSCs is
tailored to the task of recycling plastics from ELVs
in Germany, which will become necessary due to
enhanced legal requirements (cf. Section 3.2): Like
most other European member states, Germany
faces an existing ELV recycling system which has
been developing for decades to its current status,
reflecting the countryÕs peculiarities in the corre-
sponding business sectors. These peculiarities can
be deduced when the existing ELV recycling sys-
tems of different EU member states are compared.
While the German system lacks a guarantee of
returning an ELV free of charge, for example, this
possibility is standard in The Netherlands. There-
fore, the Dutch system is often cited as a bench-
mark for ELV recycling concepts. The core
feature of this concept consists of financing non-
profitable, but environmentally sound processes
of the ELV treatment by a fund. This fund is paid
by fees which are charged when a car is registered
for participation in road traffic [1]. Without going
into details, it is unlikely that the Dutch system
can be transferred to Germany, as some differences
in terms of economic stakeholders, geographic
dimensions, and annual amount of ELV require
country-tailored network organization. Other
member statesÕ concepts differ from each other in
corresponding manner. A detailed comparison of
these systems is provided in [69].
In order to comply with the European ELV
directive, some changes of the established systems
will be necessary. In Germany, the recycling of
non-metallic ELV fractions needs to be enhanced
to keep the required recycling percentages. Among
these fractions, plastics are to be targeted first (cf.
Section 3.2). As plastics material recycling for
automotive residuals is still in its infancy, a Ger-
many-wide recovery network does not exist yet.
Providing an overview over the applicationÕs pecu-
liarities without getting lost in details will help to
position the case investigated within the fields of
reverse logistics and point out the central issues
of the application.
3.1. Current situation
Since legal restrictions for the recycling of ELVs
have not been regulating the way of recycling
crucially so far, the current ELV-treatment in
Germany is mainly realized according to profit-
oriented motivation as depicted in Section 2.1. In
particular, this product-specific recycling pro-
cess (cf. Fig. 1) can be described as following
[47,70]:
• Before starting any recovery process, all vehi-
cles need to be drained in order to remove fluids
like oil, fuel, coolants etc. Apart from avoiding
the danger of spilling harmful substances during
further dismantling activities, draining protects
the latter shredder output from being contami-
nated and thus from losing sale value resp. from
rising deposition cost.
• Vehicle parts expected to have significant resale
value are disassembled first. Most promising
ELVs for this step are accident cars and
 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
End-of-Life Vehicle
(ELV)
Fluids (fuel, oil,
Draining coolants,...)
Dismantler
Components
ELV
Disassembly
Valuable Materials
Recycling
Packing
Cannibalized ELV
Ferrous Metals
Shredder
operator
Shredding Non -Ferrous Metals
Shredder Fluff
Landfilling
Fig. 1. Current ELV treatment in Germany (simplified).
Shortcomings are mainly determined by the high amount of
shredder fluff to be landfilled.
medium-aged ELVs of common models, serving
as source for spare parts; whereas other ELVs
can often not be disassembled economically.
• After componentsÕ recovery, economic disman-
tling is continued with valuable materialsÕ
recovery: components which cannot be resold
but consist of materials worth recycling are dis-
assembled (i.e. copper and PVC from wiring
harnesses [10], or platinum from catalytic con-
verters [36].
• The cannibalized ELV is sent for shredding in
order to regain the metal fractions. Especially
in Germany, an elaborate metal recycling is
pursued for decades [48]. After metal separa-
tion, a mixture consisting of plastics, glass, dust
and other components in varying composition,
the so-called shredder fluff, remains unrecycled.
Lacking any possibility of regaining valuables
from the fluff economically, this fraction is usu-
ally landfilled.
Since the recovery of components and valuable
materials accounts for a small average weight per-
cent per car only, overall recycling efficiency in
terms of weight percent is mainly determined by
the total share of ferrous metals in ELVs.
1037
3.2. Enhanced ELV treatment in future
As automotive manufacturers strive for weight
reduction of cars, plastics are replacing metal
applications in new cars to an increasing extent.
Consequently, the weight share of ELVs that is
recycled decreases according to the carÕs ferrous
metal percentage (cf. Fig. 2). Initial efforts to le-
gally enhance vehicle recycling efficiency in Ger-
many resulted in the ELV Ordinance of 1997
[25], representing the first national restriction to
demand the surveillance of weight quotas for mea-
suring the recycling success of ELVs. On European
level, similar targets led to the Directive 2000/53
EC [14]. The national adaptation of this Directive
in Germany took place in 2002 when the Law Gov-
erning the Disposal of ELVs (Altfahrzeug-Gesetz)
[26] came into effect.
As the gap between easy-to-recycle metal frac-
tion and the legally set recycling goals becomes lar-
ger, it is inevitable to tackle the challenge of
recycling materials which are currently landfilled
with the shredder fluff. Thus, recycling measures
that are beyond the current state-of-the-art can
be considered to be induced by legal motivation
(cf. Section 2.2), as take-back obligations trigger
the reprocessing sequence rather than any demand
for secondary materials, according to a ‘‘supply
push’’ [21, p. 658], in SCM. Among the material
aimed at, best options for recycling are expected
for thermoplastics, since the possibility of melting
and reshaping while preserving material properties
allows subsequent use [4,70]. Furthermore, only
few different types of thermoplastics are used in
cars, thus collecting significant quantities is viable
with reasonable effort. Hence, one precondition is
the separate collection of the different thermoplas-
tic types, as mixed plastic fractions are not suitable
for material recycling in genuine applications.
From the technical point of view, a reprocessing
chain is to be put up which allows to regain sec-
ondary material with properties comparable to
the corresponding virgin thermoplastics. Since this
option is the most promising possibility to fulfill
legal requirements and to ensure sufficient demand
for the secondary material, an elaborate recycling
process as sketched in Fig. 3 is under development:
1038 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050

Fig. 2. Development of ELV material composition and legal recycling targets in Germany. Sources: [26,70].

of nts
on e V
u c t i pon pr ehi
od c le
od om M uc
Secondary Pr le c rs an t io
h ic lie ufa n
ve pp ctu
Thermoplastics Su re
rs

Compounding
Specialized Companies

Spe
repr panies
com
repr

rs
ciail sing

Extraction
oces
Mat essing

me

se
oc

use hicle
zed

st o
eria

pha
Cu

Ve
l

ELV
Cleaning Dismantlers

End-of-Life Vehicle Dismantling and

material separation
Shredding (ELV)

Draining
Sorted ELV
Dismantler

Thermoplastics
ELV

Disassembly

Packing

Cannibalized ELV
Shredder
operator

Shredding

Fig. 3. Additional reprocessing steps to design a closed-loop supply chain for plastic materials from ELVs.

the behavior of the recycling processes and the processes in [52,53]. For the economic evaluation
reactions between the chemical components can of this process chain, a managerial accounting ap-
appropriately be modeled and simulated with proach has been established, which takes into ac-
flowsheeting programs as shown for metallurgical count life cycle aspects and activity-based costing
 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
principles [56]. This approach comprises upscaling
aspects and has been applied to the reprocessing
steps depicted in Fig. 3. This alternative avoids
downcycling and ensures closing the material loop,
taking advantage of the growing market of plastics
for automotive applications. However, the recy-
cling activities differ significantly from the produc-
tion procedures in time and manner, thus the
product recovery network represents a ‘‘reverse’’
supply chain which is totally independent of the
productÕs ‘‘forward’’ supply chain. Hence, all
elements of this reverse supply chain need to be
designed separately (therefore, the approach of
reversing the forward logistic channels, as sug-
gested by Jayaraman et al. [38], is not feasible
for the case investigated), i.e. all reprocessing steps
as well as reverse logistic tasks (reverse logistics
will be specified in Section 4).
3.3. Network design options in Germany
Currently, the depicted process chain only exists
in laboratory scale, or is reduced to small-sized,
local applications. To support future ELV treat-
ment instead, a Germany-wide reverse supply chain
is to be established. The reverse supply chain shown
in Fig. 3 will consist of the following participants:
• ELV dismantlers: Currently, there are more
than 1200 dismantlers doing business in Ger-
many with known facility locations.
• Reprocessing facilities: Shredding and cleaning
technology is currently used for similar thermo-
plastic material originating from other waste
streams. Therefore, technical specifications are
widely known. For seizing economies of scale,
a capacity range that covers at least 20% of
the annual material that is recoverable from
ELVs seems appropriate per facility. Conse-
quently, a maximum of five reprocessing facili-
ties is considered for the Germany-wide
application of the reverse supply chain.
• Extraction: Requiring high investments, the num-
ber of sites for extracting residuals from thermo-
plastics has to be kept to a minimum. Thus, one or
two facilities are taken into consideration.
• Compounding: Since compounding thermoplas-
tics is standard for virgin material also, a sub-
1039
stantial number of compounding plants is in
existence. Thus, there is no need for planning
further sites.
As the realization of these recycling steps is
mainly triggered by legal motivation, the objective
consists of establishing a product recovery net-
work that fulfills predefined recycling targets at
minimal costs. Technical specifications of repro-
cessing are not subject to change, since the second-
ary material quality standards to be achieved are
predefined. Furthermore, neither stock expenses
nor material value are decisive for the total cost,
but transportation cost represent a major portion
of the total cost for this recycling step. Hence, eco-
nomic optimization potential can mainly be seized
in the field of network design with respect to re-
verse logistics, especially for shipping disassembled
plastic components from the ELV dismantlers to
the reprocessing facilities, representing an extre-
mely converging flow of material. Furthermore,
low material density causes rather ineffective trans-
portation conditions. The collection and backhaul
of thermoplastics to one or few central locations is
thus highly dependant on the dismantlersÕ struc-
ture and the material amount collectable per
dismantler.
With respect to the optimization potential,
modeling and evaluation efforts concentrate on
reprocessing site location and transportation from
ELV dismantlers to these reprocessing sites. Con-
sidering all the influence factors named, it is obvi-
ous that network design options primarily focus
on the location and the subsequent regional subdi-
vision, i.e. the service area per facility. In addition,
reverse logistics tasks comprise vehicle routing is-
sues to ensure economic material backhaul within
a service area.
While the aspects presented deal with establish-
ing a CLSC, adaptations in network design and
vehicle routing will be necessary due to the steadily
rising amount of thermoplastics to be collected in
the long run. Considering the average vehicle life-
time of more than 10 years, the effects of rising
thermoplastics fraction in cars and the need to ful-
fill enhanced legal quotas will cause the amount
of recyclable thermoplastics from ELVs to rise
at least until the year 2015. Different options for
1040 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
subsequently establishing additional reprocessing
sites and adapting service areas and vehicle routing
accordingly have been carried out and evaluated.
Selected results are presented in [57–59].
When varying the number and location of the
reprocessing sites, it is assumed that the number
and location of the ELV dismantlers in Germany
remains unchanged. However, some developments
indicate a concentration process in ELV disman-
tler business (cf. Section 6). Therefore, a scenario
analysis that varies the number of ELV disman-
tlers while keeping other parameters constant is
conducted.
4. Reverse logistics and vehicle routing planning
As the framework for a specific reverse logis-
tics task contains numerous restrictions as well as
degrees of freedom which form a unique character-
istic for the case investigated, numerous backhaul-
ing models have been reported in this field yet. An
overview of literature dealing with reverse logistics
is provided by [8]. A comprehensive overview on
recent case studies and corresponding models on
collection and transport approaches is provided
by [5]. Even though the models presented by [5]
are much more detailed than the one to be put
up in the following, they are not considered to be
suitable for adaptation because of significant dif-
ferences in framework parameters. In particular,
the following assumptions cannot be transferred
to the case investigated here: constant return flows
[5, p. 110], an approximated average distance per
stop 5, p. 111] and the high density of collection
points within the area investigated [5, p. 119].
Hence, focusing on the application of spent ELV
componentsÕ backhaul from the dismantlers to
reprocessing facilities, subsequent modeling has
to be realized with respect to the following
preconditions:
• Nearly all end-of-life situations of consumer
products are marked by an area-wide occur-
rence of spent products (sources) in combina-
tion with few recycling sites for reprocessing
(sinks). In order to ensure steady material sup-
ply for these recycling sites, periodic backhaul
is required. Consequently, the amount collect-
ible per source and period is fairly low, i.e.
less-than-truckload shipments are due for most
products and components. Thus, transportation
planning for this kind of networks needs to deal
with vehicle routing issues to ensure economic
backhaul [2]. Regarding approaches for tack-
ling transportation tasks, the vehicle routing
problem (VRP) [11] proves to be much more
complex than single-line transportation issues
which comprise one pick-up and one delivery
per route only. Hence, there are no general solu-
tion procedures for VRPs since search strategies
have to be adapted to the individual degrees of
freedom which are suitable for the case applied
(a concept for flexibly handling general-purpose
VRPs can be found in [30]). A classification of
side constraints occurring in real-life VRPs is
provided by van Breedam [65].
• Since the quantity, quality, and timing of the
returned materials are highly variable, manag-
ing of these return flows must cope with several
uncertainties. Thus, forecasting methods are
necessary to estimate parameter developments
[37,39]. Apart from variations in material
amount, additional parameters like specific
transportation costs (for example, the highway
toll to be realized in Germany will cause a dis-
tance-related rise of transportation costs) or
the number of dismantlers may be subject to
change. With regard to these uncertainties, the
approach for modeling reverse logistics needs
to be robust for basic parameter changes. By
scenario analyses, different network design
options can be tested and become comparable
in terms of economics.
With respect to these aspects, formulating a
vehicle routing approach with the following prop-
erties is due: on the one hand, the model needs to
be suitable for the special structure of backhauling
thermoplastic material from ELVs. In particular, a
large number of material sources needs to be mod-
eled, while time window restrictions are not cru-
cial. On the other hand, multiple possibilities for
parameter changes need to be provided in order
to enable scenario analyses as shown. Since statis-
tical interdependencies and functional behaviour
 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050 1041

of parameters and their variation are not accessi- depot (Index 0), and M tours, the model can be
ble, scenario comparisons instead of a global sen- formulated as following (with variations taken
sitivity analysis (cf. [68]) are considered to be from [11, pp. 215f]): with
appropriate for reasonable network planning in
the case investigated. In the following chapter, an D maximum distance per tour (km),
application-tailored vehicle routing model is pre- Q maximum capacity per tour (kg resp. m3),
sented, which is designed to be tackled by a meta- cd variable cost per distance unit (€/km),
heuristic approach. dij distance between nodes i and j (km),
bj load collectible at dismantler j (kg resp.
m3),
5. A model for vehicle routing planning within
product recovery networks

1 if dismantler j is served in tour k;
y jk ¼
Based on the planned locations of the repro- 0 else;
cessing facilities (for details of facility location

1 if node j is the successor of node i;
planning aspects for reprocessing sites see [58]) xij ¼
0 else;
and on the corresponding number of dismantlers
to be served per collection period, the objective
function for the VRP seeks to minimize the total minimize:
length of all tours necessary. In order to tackle X
M n X
X n
the transport problem by deterministic, indepen- F ðx; yÞ ¼ cd
d ij
xij
y ij ; ð1Þ
dent one-depot VRPs (one per reprocessing facil- k¼1 i¼0 j¼0

ity), a regional categorization of the dismantlers subject to:

as well as predefined collection periods are set X n X n
(for details see [59]). Apart from general limita- d ij
xij
y jk 6 D for k ¼ 1; . . . ; M; ð2Þ
tions, i.e. ensuring the service for every dismantler i¼0 j¼0

or guaranteeing the construction of tours that start X

n

and end at the reprocessing site, restrictions occur bj
y jk 6 Q for k ¼ 1; . . . ; M; ð3Þ

j¼1
mainly due to capacity limitations of the trucks
used: the total amount of material collectable
M X
X n
xij
y jk ¼ 1 for j ¼ 1; . . . ; n; ð4Þ
per tour limits the number of dismantlers that k¼1 i¼0
can be served in one tour. Additionally, exceeding Xn
a length limit per tour results in overnight tours. x0j
y jk ¼ 1 for k ¼ 1; . . . ; M; ð5Þ
These tours are to be avoided, because the ex- j¼1
penses for driving staff will then rise significantly. X
n

To cope with both effects, limits and penalty values
need to be assigned for the number of customers
served and for the total tour distance.
Formally speaking, we refer to a symmetric
capacitated vehicle routing problem with one de-
pot (i.e. the reprocessing site) and a defined maxi-
mum tour distance. We assume the number of
trucks available to be sufficient, thus the number
of tours not to be restricted. Objective is to gener-
ate a tour schedule with minimal cost, with those
related to the tour distance in an initial approxi-
mation (see objective function (1)). Introducing
n + 1 nodes, consisting of n dismantlers and one
xi0
y ik ¼ 1 for k ¼ 1; . . . ; M: ð6Þ
i¼1
The restrictions (2) and (3) ensure that maxi-
mum tour distance and maximum capacity are
not exceeded, whereas constraints (4) imply that
every dismantler is served and belongs to exactly
one tour. Constraints (5) and (6) require every tour
to start and end at the depot, thus no invalid tour
can be constructed.
Currently, more than 1200 dismantlers are
known in Germany. Even though the number
per VRP is significantly smaller as regional subdi-
visions occur and not every dismantler is served
1042 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
per collection period, the complexity of VRPs [43]
restricts the application of exact solutions to prob-
lems of very small size (the complexity of selected
routing problems as well as references to special
problems which are solvable in polynomial time
can be found in [22, p. 211ff]). As the number of
dismantlers to be considered is far too large to ex-
pect exact solutions in feasible calculation times,
heuristic procedures need to be applied. An exam-
ple for heuristic approaches to solve the problem is
suggested in [11, p. 216]. However, the procedure
stated there requires a predefined customer (i.e.
dismantler) combination per tour; optimization
potential is thus limited to different combinations
of each dismantler set per tour. In order to obtain
good, not necessarily optimal results at reasonable
time in combination with a broadened search
space, further heuristic concepts are due. For this
purpose, intelligent search methods have been
established, which represent search structures for
picking promising problem solutions including
refinement. To enhance efficiency in searching per-
formance, heuristics themselves are often con-
trolled by so-called metaheuristics, representing
the memory of the algorithm. Examples for these
metaheuristics are Simulated Annealing, Genetic
Algorithms, or Tabu Search. Especially Tabu
Search (TS) has been proving to cope sufficiently
with VRP problems [17,23]. Thus, TS is chosen to
tackle the task introduced above.
The TS concept has been mainly developed by
Glover, who also introduced the expressions Tabu
Search and metaheuristics [27]. An overview of TS
is also provided by Glover [28,29], whereas basic
applications of TS are laid down by Voss [67]. De-
spite of representing a relatively young strategy,
TS has been successfully used in various business
cases, such as container loading [6], delivery prob-
lems [49], or flight network design [7].
Before going into details for the special applica-
tion of strategic network planning, a brief over-
view of TS peculiarities is presented. Relying on
a viable problem solution, the so-called starting
solution, TS seeks to improve the objective func-
tion by altering the starting solution in details
to be defined in advance. This detail alteration,
consisting of a so-called move, is realized when
representing the best improvement of all moves
possible. The entity of all moves is determined by
the definition of a solutionÕs neighborhood,
i.e. all alterations allowed to be performed in one
single move. So far, TS shows all properties of
common greedy algorithms for optimization. Dif-
ferences show up when no further improvement
of the objective function is possible by any move:
Instead of terminating, TS proceeds by exerting
the move that represents the minimal change for
the worse in the objective function. In order to
avoid cycling by alternatively exerting the last
improvement move possible and the complemen-
tary move for the least deterioration, TS Ôremem-
bersÕ the moves made by storing them in a Tabu
list. These moves are temporarily forbidden. In
designing the duration of the Tabu state and the
conditions for Tabu setting, problem-tailored
avoidance of cycling is possible. Furthermore, in-
valid solutions (i.e. those violating one or more
constraints set) can be accepted temporarily in
order to diversify the search to previously unex-
plored fields of possible solutions. Guiding the
search towards the return to admissible solutions
is realized by applying penalty terms to the calcu-
lation of the objective function, which cause signif-
icant deterioration to the objective value if one or
more constraints are not met. However, results of
these solutions are comparable to valid ones and
can thus be part of the search process.
With these features, TS algorithms can over-
come local optima and continue searching for bet-
ter solutions. However, the finding of the global
optimum—if there is one—cannot be guaranteed.
Consequently, a termination criterion needs to be
defined to truncate the search process, for example
the total number of moves to be made or a prede-
fined number of moved without improving be best
solution found.
In the specific case considered here, we seize the
potential of altering dismantler combinations
per tour and enable broad search diversification.
Thus the Tabu Search approach implemented is
designed to alter significantly from the tour com-
position of the starting solution during the search
process. Therefore, the algorithm yields to capac-
ity and tour distance restrictions to a certain extent
when the objective function is calculated, as
penalty terms are provided if the corresponding
 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
restrictions are violated. With the additional
parameters, pD (penalty cost for exceeding the
maximum distance per tour, €/km) and pQ (pen-
alty cost for exceeding the maximum capacity per
tour, €/kg), the objective function (1) is altered
as follows:
( ied can be quantified only by carrying out VRP
X
M n X
X n
F ðx; yÞ ¼ cd
d ij
xij
y jk
k¼1 i¼0 j¼0
" !
n X
X n
þ pD
max 0; d ij
xij
y jk
i¼0 j¼0
" ! #)
X
n
þ pQ
max 0; bj
y jk Q
j¼1
Replacing objective function (1) with (7) and
omitting restrictions (2) and (3) results in the cost
minimization model underlying the Tabu Search
approach. After the initial tour schedule is gener-
ated, the TS procedure starts to search enhanced
solutions by taking into account the following
move types (the move type systematic is adapted
from a procedure introduced by Scholl and Weber
[50], who carried out similar research for a distri-
bution task):
• swapping the position of two dismantlers within
an existing tour,
• swapping the position of two dismantlers
located in two different existing tours,
• swapping connections of two dismantlers to
their successors within an existing tour, and
• swapping connections of two dismantlers to
their successors located in two different existing
tours.
Before exerting a move, each of these move
types is evaluated according to the objective func-
tion, testing the dismantlersÕ structure for promis-
ing candidates in advance. The pool of
neighborhood solutions is further determined by
the entity of successors per candidate. After testing
all combinations allowed, the move representing
the best improvement resp. the least deterioration
of the objective function is performed. The new
tour schedule then serves as an origin for the next
iteration. After exerting a given number of itera-
1043
tions, the algorithm is terminated and the best
solution found within the iterations is provided.
While the search procedure is almost standard,
the problem characteristics differ widely with the
scenarios chosen. As the transportation cost devi-
ations which occur when some parameters are var-
calculations for different scenarios, multiple adap-
tation possibilities need to be provided regarding
# the data input for the VRP model:
D
• The significant rise of the plastic weight share in
todayÕs cars will be reflected in the ELV mate-
rial composition in future. Thus, a correspond-
: ð7Þ
ing increase in the amount of plastics collectible
for reprocessing can be forecasted and serves as
an input for scenarios which represent the back-
haul situation for different points of time.
• As industrial-scale reprocessing facilities are not
existing yet, different network design options
regarding the number as well as the location
of these material sinks need to be evaluated.
Accordingly, assigning dismantlers to repro-
cessing steps (the regional area subdivision) is
crucial for determining reverse supply chain
costs as well.
• With regard to developments in the dismantler
business, the number of dismantlers may alter.
Subsequently, adaptations in the material
amount collectible per dismantler need to be
performed.
To enable appropriate vehicle routing calcula-
tion, some algorithm constraints need to be adapt-
able to numerous different scenario settings. For
example, the number and the geographic position
of reprocessing facilities influence the candidate
and the neighborhood choice, and the maximum
tour distance necessary to serve all dismantlers,
to name some parameters only. In order to provide
a reasonable computing time for every scenario
calculated, the algorithm construction needs to
be easily adaptable for such changes. Hence, the
following parameters are eligible for every
application:
• number of iterations to be performed,
• candidate and neighborhood choice,
1044 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
• maximum distance per tour allowed and corre-
sponding penalty,
• maximum dismantler number per tour allowed
and corresponding penalty,
• Tabu list length and
• criteria for Tabu setting.
Due to the flexibility of the metaheuristic ap-
proach, it can be used for planning purposes for a
wide range of CLSCs. With regard to emerging
producer responsibility for further products in Eur-
ope [13,15,16], the need to establish such CLSCs
will rise in the next years. Product-specific parame-
ters like transportation density, number and loca-
tion of material sources, or truckload capacities
can be easily adapted by modifying the correspond-
ing parameters. In the following chapter, the algo-
rithm is applied to the case of ELV recycling.
6. Application for the end-of-life vehicle treatment
In order to obtain results which are relevant for
the ELV situation depicted in Section 3, real data
from the fields of automotive recycling has been
gathered. Concentrating on high density polyeth-
ylene (HD-PE), one of the main fractions of ther-
moplastics from ELV, the following information
serves as input data:
• Geographic location of German dismantlers via
ZIP code.
• Forecasted material amount available for 2015
(14,000 tons per year), subdivided into regional
fractions on German state level.
• Predefined rotational collection sequence of
four weeks for every facility location in order
to guarantee steady material supply without
the need of extensive material stocks.
• Load capacity per truck according to the mate-
rial hauled (10 tons), in combination with a
freight rate of 1.10 €/km.
• The maximum distance per tour is uniformly set
to 600 km, for reasons of scenario
comparability.
The differences between the scenarios encom-
pass the number of the dismantlers considered:
According to a recent poll, a substantial amount
of the dismantling operators are not sure whether
they can continue their business [44]. Especially
small and medium-sized enterprises can hardly
cope with the investment costs that are due to up-
grade the operation equipment according to the
specifications which are laid down in the German
law on ELVs. Accordingly, a concentration pro-
cess resulting in fewer dismantlers, each of them
processing a higher amount of ELVs, seems to
be likely. In addition, automotive manufacturers
who have to realize the manufacturer responsibil-
ity will favor this tendency from an economic
point of view, since cost savings can be realized
due to economies of scale. As a consequence, we
consider different network structures which are
depicted in three scenarios for the situation in
the year 2015:
• Scenario A, representing the reference case,
implies no change in the number of dismantlers
by the year 2015. Thus, the todayÕs total of 1202
dismantlers are considered.
• Scenario B is marked by a decline from 1202 to
approximately 840 dismantlers. This figure is
stated as the pollÕs result, mirroring future
expectations of the business branch.
• Scenario C serves as the lower bound, compris-
ing 500 dismantlers. A further decline beneath
this number is hardly expected, as a sufficient
area coverage cannot be guaranteed otherwise.
In order to maintain comparability, the same
number and locations for the reprocessing facilities
have been considered for all scenarios. With re-
spect to maximum tour lengths and investments
for reprocessing facilities, alternatives with differ-
ent numbers of reprocessing facilities and subdivi-
sions in service areas have been evaluated. The
subsequent implementation of three reprocessing
facilities by the year 2015 has been proven to rep-
resent a feasible way to fulfill both requirements
adequately. The site location and the correspond-
ing service area construction have been determined
in order to provide equal material amount distri-
bution while transportation distances being as
short as possible. The procedures for identifying
sites and service areas are presented in [58].
 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
Apart from the number of dismantlers, the
material amount collectible per dismantler has
been adapted to ensure an equal material amount
of 14,000 tons per year in each scenario, which is
uniformly distributed to the three regions (cf.
Table 1). Fig. 4 depicts the scenario framework
for calculation, including the regional intersection,
the location of the reprocessing facilities and an
overview of the area coverage by the correspond-
ing number of dismantlers per scenario.
Applying the metaheuristic presented in Section
5, the transportation costs for each of the scenarios
have been calculated, using the following parame-
ters (cf. Section 5):
• Number of iterations to be performed: 1000 or
earlier termination when finding an improved
solution for 100 consecutive iterations is not
possible.
• Candidate and neighborhood choice: In every
iteration, each dismantler (candidate) is consid-
ered for a move with another dismantler within
a radius of 100 km (neighborhood), using the
move types described in Section 5.
• Maximum distance per tour allowed and corre-
sponding penalty: The maximum distance is set
to 600 km, representing the limit for tour com-
pletion within one single workday. Exceeding
this limit is penalized by doubling the transpor-
tation costs for the additional distance.
• Maximum dismantler number per tour allowed
and corresponding penalty: Due to truck capac-
ity restrictions, the number is strictly limited to
four, combined with a prohibitive penalty value
for breaking the limit. Hence, no tour serves
more than four dismantlers.
• Tabu list length: Setting the length to 20 moves
has been proving to be sufficient to prevent the
solution procedure from cycling.
Table 1
Scenario specifications on regional level
Scenario A B
Region 1 2 3 1
# of dismantlers 400 359 443
Material amount [t/a] 4666 4666 4666
1045
• Criteria for Tabu setting: The results were
obtained by using unconditional tabu criteria.
Consequently, a move has been set tabu when
exerted for the following 20 iterations, regard-
less of the move type used or other parameters.
Carrying out the Tabu Search procedure for
every region and scenario, the number of iterations
necessary differ between 371 and 590. Conse-
quently, the maximum total of 1000 iterations
has not been needed for any of the searches con-
ducted; earlier termination of the search occurred
since no further improvement has been found.
To verify the procedure, several search results have
been re-evaluated by continuing the search until
1000 iterations. As no improvements in the corre-
sponding objective functions could be obtained,
the procedure as stated has considered to be ade-
quately tailored to the application. Computing re-
sults are on single tour level and thus very detailed.
For a suitable investigation into the scenarios pre-
sented without going beyond the scope, the results
are presented in a top–down way.
At the highest aggregation level, i.e. in terms of
Germany-wide annual transport distance and spe-
cific transportation costs, no significant differences
between the scenarios can be stated (cf. Table 2).
The reasons for this uniformity, especially regard-
ing the costs, can partly be deduced from the fact
that the same amount of material is hauled annu-
ally in the same regions for every scenario, with
rising concentration per material source as the
number of dismantlers declines. In other words,
the fewer dismantlers exist, the more often they
are served per year as a higher amount of mate-
rial has to be collected. For scenario details
please refer to the specifications laid down ear-
lier in this chapter, in particular to Fig. 4 and
Table 1.
C
2 3 1 2 3
288 283 269 171 168 161
4666 4666 4666 4666 4666 4666
1046 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050

Fig. 4. Scenario definition.

Table 2
Distance and cost values per scenario
Result category Scenario
Scenario A (1202 dismantlers) Scenario B (840 dismantlers) Scenario C (500 dismantlers)
Annual transport distance (km/a) 798,795 763,860 787,674
Specific transportation costs (€/t) 73 73 73

Hence, to determine the differences between the
scenarios, a more detailed investigation is neces-
sary. Fig. 5 thus pictures results for every region
of each scenario. Regarding tour lengths charac-
teristics and the numbers of tours necessary per
collection period, still no traceable trend can be
determined. While the number of tours per collec-
tion period remain almost constant, the deviations
in tour lengths between the corresponding regions
of each scenario seem to be erratically.
Tendencies which are caused by declining the
number of dismantlers as realized in the scenarios
can be observed when evaluating the annual trans-
port distance in combination with the specific

42
Scenario A Scenario B Scenario C 1200
(1202 Dismantlers) (840 Dismantlers) (500 Dismantlers)

41 1000 No. of Tours per

Collection Period
Tour length [km]
No. of Tours

40 800 Maximum
Tour Length

39 600 Minimum
Tour Length

38 400 Average
Tour Length

37 200

36 0
Region Region Region Region Region Region Region Region Region
1 2 3 1 2 3 1 2 3

Fig. 5. Regional tour characteristics.

 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
Scenario A Scenario B
310.000 (1202 Dismantlers) (840 Dismantlers)
290.000
270.000
250.000
km/a
230.000
210.000
190.000
170.000
Region Region Region Region
1 2 3 1
Fig. 6. Regional distances and cost values.
transportation costs per region (cf. Fig. 6): While a
decline in the number of dismantlers causes a sig-
nificant drop in both categories for region 2, the
other regions show a substantial rise in terms of
specific transportation costs along with erratic ef-
fects in transport distances.
These results indicate the differences between
the regions in size and in dismantler density: Con-
trary to region 2, which accounts for a third of the
material amount collectible at a comparably small
size, the regions 1 and 3 contain fewer dismantlers
per area and are therefore of larger dimension (cf.
Fig. 4). As a consequence, the distances between
single tour stops become longer when the number
of dismantlers is declined. Thus, the options to
avoid overnight tours in regions where they are
geographically unavoidable become scarce. In the
regions 1 and 3, the percentage of overnight tours
out of all tours necessary is rising, which causes
additional costs which excessively contribute to
the specific transportation costs. This effect does
not occur in small regions, where single tour
lengths exceed the limit set in rare exceptions only.
Consequently, the scenario results obtained
highlight the effects of altering preconditions which
are modeled due to uncertainties in the CLSC, and
also deliver quantifiable results. In particular, cost
effects are obtained and can be compared to further
reverse logistics structures of the case investigated.
For example, improvements may be realized by
reshaping the regions for material collection, tak-
ing into account not only the material amount col-
lectible, but also the product size.
1047
Scenario C
(500 Dismantlers) 110
100
90 Annual
Transport
80 Distance
/t
[km/a]
70
Specific
60 Transportation
Costs
[ /t]
50
40
Region Region Region Region Region
2 3 1 2 3
7. Conclusions
Representing a small choice of all options pos-
sible, the results shown underline the vast variety
of influence factors for the problem investigated.
In this contribution, we pointed out that flexible
algorithms are necessary to compare different sce-
narios of establishing a reverse supply chain for
collecting secondary material. Dealing with uncer-
tainties regarding manifold influences on future
CLSCs, scenario analyses are suitable to evaluate
transportation distances and costs. To illustrate
the approach presented, three exemplary scenarios
have been put up and corresponding results are
presented. The conclusions drawn from these re-
sults help to put up improved scenarios and thus
contribute to comprehensive reverse logistics plan-
ning for the application presented.
Apart from ELVs, manufacturers of other
products are also obliged by law to take back
end-of-life products and meet recycling targets.
Consequently, similar reverse logistic tasks are ex-
pected to emerge soon. The model presented can
be adapted to other applications by redefining
model constraints as shown in Section 5, making
the approach transferable to further product
recovery network design tasks.
Finally, the presented approach will have to be
incorporated in an information platform that is
capable to coordinate the different stakeholders
within a CLSC. Enterprise Resource Planning
(ERP) and Advanced Planning Systems (APS)
are the major systems to be discussed within
1048 F. Schultmann et al. / European Journal of Operational Research 171 (2006) 1033–1050
supply chain planning and coordination tasks
[18,63]. It has already been proved that environ-
mental issues like dismantling and recycling plan-
ning can, to a certain extent, be integrated in
such software systems as well [55].
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