Original Article | 2010, Vol.32, No.6, pp. 581-588
Designing the raw material collection system for profit maximization under a step–price policy
Kanya Auckara-aree and Rein Boondiskulchok
pp. 581 - 588
Abstract
In this study, we investigate a complex situation in designing a raw material collection system, which involves collection station location, supplier selection, supplier–collection allocation, and transporation decisions. In a raw material collection system, a collector has to collect more raw material quantity in order to get higher income as the price of raw material is quantity dependent. The more suppliers visit, the more income receives; however, when a collector decides to visit more suppliers, traveling distance will be longer, which will result in higher transportation costs. We formulate a Mixed Integer Programming for a location routing with setp–price policy model to find the optimal solution. The basic trade–off of the proposed model is between revenue received from totally collected quantity and total costs both fixed costs and variable costs from expanding the collection area. Instances which are created according to real–life data are applied to test the proposed model. The computational results indicate that the complex raw material collcetion system can be obtained by the proposed mathethical model. The mathematical model gives the benefit for the use of determining the optimum raw material collection system with profit maximization. The results can be used for setting up a real raw material collection system.
