Design of a Receivable Collection System: Sequential Building Heuristics

This paper extends previous work on the use of sequential building heuristics for the design of a collection system, a linear fixed-charge problem that includes the design of a lock-box system as an important subproblem. The heuristic extensions in this paper first present simple methods for eliminating “premature termination” (stopping the heuristics while there are still worthwhile alternatives not included in the collection system) and unprofitable inclusion (including collection alternatives with net benefits less than the fixed cost). Initiation procedures that increase computational efficiency and reduce the likelihood of significant suboptimization are presented. Finally, the simple one-at-a-time building procedure is extended to include joint exclusion-building (a limited switching plus building) and combination switching-building rules that consider combinations of alternatives rather than one-at-a-time evaluation.