11 th International Research/Expert Conference ”Trends in the Development of Machinery and Associated Technology” TMT 2007, Hammamet, Tunisia, 05-09 September, 2007. A HEURISTIC APPROACH FOR REVERSE LOGISTICS NETWORKS Bahadır Gülsün* Ender Bildik* Gülfem Tuzkaya* * Department of Industrial Engineering, Yildiz Technical University Barbaros Street, Yildiz, Istanbul 34349,Turkey ABSTRACT Environmental concerns, competition, economic factors, etc. motivates both the academicians and practitioners to study on reverse logistics activities. Reverse logistics contains activities such as product returns, recycling, substitution, reuse, disposal, refurbishment, repair and remanufacturing. Product returns constitutes an important portion in total company costs. A company can take competitive advantage with cost reductions in product returns in terms of transportation, inventory and warehousing costs. Determining convenient quantities and location places for centralized return centers is an important decision in reverse logistics networks. In this paper a heuristic approach is proposed for this decision making area. Keywords: Reverse Logistics Networks, Genetic Algorithms, Heuristics 1. INTRODUCTION Due to the threatening level of environmental problems, environmental initiatives, which are enforced by governments, customers or companies themselves, have become an obligation. As a part of environmentally conscious initiatives, reverse logistics has taken considerable attention both from academicians and practitioners. Rogers and Tibben-Lembke [1] defined reverse logistics (RL) as “the process of planning, implementing and controlling the cost effective flow of row materials, in-process inventory, finished goods and related information from the point of origin for the purpose of recapturing value or proper disposal”. Traditionally, the term of “logistics” is perceived only with the forward side of the concept. On the other hand, many reasons, such as manufacturing returns, commercial returns (B2B and B2C), product recalls, warranty returns, service returns, end-of-use returns, end-of-life returns cause reverse direction product corridors and this additional reverse side of the logistics provides a closed-loop [2]. Usually, RL can be perceived as exactly the reverse of the forward logistics (FL), however, in lots of decision making areas, RL is not similar to the FL. RL may have different channels, collection points, decision making units, product characteristics, etc. Differences between forward and reverse logistics are in Table 1 [3]: Table 1. Differences between forward and reverse logistics [3] Forward Logistics Reverse Logistics Forecasting relatively straightforward Forecasting more difficult One to many transportation Many to one transportation Product quality uniform Product quality not uniform Product packaging uniform Product packaging often damaged Destination/routing clear Destination/routing unclear Standardized channel Exception driven Disposition options clear Disposition not clear Pricing relatively uniform Pricing dependent on many factors Importance of speed recognized Speed often not considered a priority Forward distribution costs closely monitored by accounting systems Reverse costs less directly visible Inventory management consistent Inventory management not consistent Product lifecycle manageable Product lifecycle issues more complex Negotiation between parties straightforward Negotiation complicated by additional considerations Marketing methods well-known Marketing complicated by several factors Real-time information readily available to truck product Visibility of process less transparent 427