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Multi-product capacitated facility location problem with general production and building costs

Author

Listed:
  • Alejandro Montoya

    (Universidad EAFIT)

  • Mario C. Vélez–Gallego

    (Universidad EAFIT)

  • Juan G. Villegas

    (Facultad de Ingeniería – Universidad de Antioquia)

Abstract

This research introduces the multi-product capacitated facility location problem with general production and building costs (MP-CFLPGC). The MP-CFLPGC extends previous problems found in the literature by including multiple products and general production and building cost functions that allow the modeling of different behaviors like economies of scale and congestion. The MP-CFLPGC is formulated as a mixed integer linear program (MILP). To evaluate the performance of the proposed formulation we analyze the results of a commercial optimizer on a set of 288 randomly generated test instances that resemble the Colombian cement industry supply chain. After one hour the optimizer achieved an optimality gap of 1.0 % or less in 55 % out of the 288 test instances. On average the optimality gap was 3.57 %. Additionally, we propose a randomized mathematical-programming-based heuristic for the test instances where the MILP formulation presents significantly high optimality gaps.

Suggested Citation

  • Alejandro Montoya & Mario C. Vélez–Gallego & Juan G. Villegas, 2016. "Multi-product capacitated facility location problem with general production and building costs," Netnomics, Springer, vol. 17(1), pages 47-70, July.
    • Handle: RePEc:kap:netnom:v:17:y:2016:i:1:d:10.1007_s11066-016-9102-6
    DOI: 10.1007/s11066-016-9102-6
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