With headquarters in Houston, Texas, Waste Management, Inc. (a Fortune 100 company), is the leading provider of comprehensive waste-management services in North America. Its network of operations includes 293 active landfill disposal sites, 16 waste-to-energy plants, 72 landfill gas-to-energy facilities, 146 recycling plants, 346 transfer stations, and 435 collection operations (depots) to provide services to nearly 20 million residential customers and 2 million commercial customers throughout the United States and Canada. The company’s collection-and-transfer vehicles need to follow nearly 20,000 daily routes. With an annual operating cost of nearly $120,000 per vehicle, management wanted to have a comprehensive route-management system that would make every route as profitable and efficient as possible. Therefore, a management science team that included a number of consultants was formed to attack this problem. The heart of the route-management system developed by this team is a huge mixed BIP model that optimizes the routes assigned to the respective collection-and-transfer vehicles. Although the objective function takes several factors into account, the primary goal is the minimization of total travel time. The main decision variables are binary variables that equal 1 if the route assigned to a particular vehicle includes a particular possible leg and that equal 0 otherwise. A geographical information system (GIS) provides the data about the distance and time required to go between any two points. All of this is imbedded within a Web-based Java application that is integrated with the company’s other systems. It is estimated that the recent implementation of this comprehensive route-management system will increase the company’s cash flow by $648 million over a five-year period, largely because of savings of $498 million in operational expenses over this same period. It also is providing better customer service.
For this problem please read the Summary for Waste Management, including both the financial and non-financial benefits.