Contract-out planning of solid waste management system under uncertainty: Case study on Toronto, Ontario, Canada

Abstract Contracting out local solid waste management service is assumed to deliver cost savings without sacrificing the service quality. But the evidence for this point viewed from North America is mixed. We conduct an optimization analysis of the solid waste management system under different contracting out situation by formulating and applying a waste management privatization model (WMPM) to compare the private and public services. The WMPM model is developed to minimize the inexact costs (direct costs, indirect costs, and penalties) under three waste service delivery scenarios, which are 0% contracting out service, 100% contracting out service, and partly contracting out service. The three scenarios have covered most types of the solid waste management systems regarding service provider's characteristic in North America. The inexact costs presented as interval numbers are processed to make feasible decision alternatives by interpreting and analyzing the interval solutions with respect to projected scenarios. While the service quality can be evaluated by the amount of penalties paid from the private sector to the City. The trade-off made between the system cost and the service quality to maximize the total benefits can be addressed through the WMPM model. From the case study, we find systematic support for system costs increasing and service quality degrading resulting from both 100% and partly contracting out service in Toronto. The results indicate that the ranges of the total system costs are much larger under 100% and partly privatization scenarios than under 0% privatization scenario. Therefore, privatization makes the municipal solid waste management system less reliable on investment for a long-time planned horizon. To ensure cost savings while not degrading the service quality, attention needs to be given to the contract establishment between the public and the private service providers.