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Restructuring Facility Networks under Economy of Scales

Author

Listed:
  • Marta Sofia R. Monteiro

    (Faculdade de Economia, Universidade do Porto, LIAAD-INESC L.A.,UP)

  • Dalila B. M. M. Fontes

    (Faculdade de Economia, Universidade do Porto, LIAAD-INESC L.A.,UP)

  • Fernando A. C. C. Fontes

    (Faculdade de Engenharia, Universidade do Porto, ISR-Porto, UP)

Abstract

In this work we address the facility network restructuring problem. This problem is closely related to location/allocation and set covering problems. However, none of the above includes all its complexity nor involves all the decision types. Due to the presence of economies of scale, another type of complexity arises since we must minimize a concave cost function. Therefore we are extending current literature by considering a new problem. For this problem a local search heuristic is proposed, where an initially feasible solution, obtained by solving a related linear problem, is improved by a slope scaling procedure and then by drop and swap operations. Computational results showing the effectiveness and efficiency of the solution procedure are reported.

Suggested Citation

  • Marta Sofia R. Monteiro & Dalila B. M. M. Fontes & Fernando A. C. C. Fontes, 2009. "Restructuring Facility Networks under Economy of Scales," FEP Working Papers 324, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:324
    as

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    File URL: http://www.fep.up.pt/investigacao/workingpapers/09.06.02_wp324.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Location; Allocation; Covering; Concave Optimization; Heuristics;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory

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