In this study, a reverse logistics model is developed to minimize the environmental and operational costs of exchanging waste and by-product materials in a business-to-business network. This research investigates the opportunities for substituting raw materials usage with value added waste/by-product materials collected from a regional network. The network contains manufacturers, collection centers, value added process centers (e.g. disassembly, recycling, or remanufacturing), disposal centers, and virgin material market. The model captures environmental costs as well as the operational costs. The model is applied on the Los Angeles County Aluminum industry case. An Economic Input-Output (EIO) clustering method and Principal Component Analysis (PCA) are employed to develop industrial clusters in the region. Studying these clusters expands our knowledge regarding materials flow in the region. Based on the outcome of the clustering, Electronics industries cluster is discovered to be one of the major links in terms of the economics indices.