Refuse collection, one of important elements in reverse logistics, is an activity rendering recyclables or wastes and moving them to some points where further treatment is required. Among various decisions in the collection activity, we focus on network design, which is the problem of locating collection points as well as allocating refuses at demand points to collection points while satisfying the capacity restriction at each collection point. Here, the collection point is the place where recyclables or wastes near the point are gathered, and locating the collection points is done by selecting them from a given set of potential sites. The objective is to minimize the sum of fixed costs to open collection points and transportation costs to move refuses from demand points to collection points. An integer programming model is developed to represent the problem mathematically and due to the complexity of the problem, two types of heuristics, one with simultaneous and the others with separate location and allocation, are suggested. Computational experiments were done on test problems up to 500 potential sites, and the results are reported. In particular, some heuristics gave near optimal solutions for small-size test problems, i.e., 2% gaps in average from the optimal solution values.