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A Capacitated Facility Location Model with Bidirectional Flows

Author

Listed:
  • Zhi-Hai Zhang

    (Department of Industrial Engineering, Tsinghua University, Beijing 100084, China)

  • Gemma Berenguer

    (Krannert School of Management, Purdue University, West Lafayette, Indiana 47907)

  • Zuo-Jun (Max) Shen

    (Department of Industrial Engineering and Operations Research, University of California, Berkeley, Berkeley, California 94720)

Abstract

Supply chains with returned products are receiving increasing attention in the operations management community. The present paper studies a capacitated facility location model with bidirectional flows and a marginal value of time for returned products. The distribution system consists of a single supplier that provides one new product to a set of distribution centers (DCs), which then ships to the final retailers. While at the retailers' site, products can be shipped back to the supplier for reprocessing. Each DC is capacitated and handles stocks of new and/or returned products. The model is a nonlinear mixed-integer program that optimizes DC location and allocation between retailers and DCs. We show that it can be converted to a conic quadratic program that can be efficiently solved. Some valid inequalities are added to the program to improve computational efficiency. We conclude by reporting numerical experiments that reveal some interesting properties of the model.

Suggested Citation

  • Zhi-Hai Zhang & Gemma Berenguer & Zuo-Jun (Max) Shen, 2015. "A Capacitated Facility Location Model with Bidirectional Flows," Transportation Science, INFORMS, vol. 49(1), pages 114-129, February.
    • Handle: RePEc:inm:ortrsc:v:49:y:2015:i:1:p:114-129
    DOI: 10.1287/trsc.2013.0496
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