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Formulation and solution of a two-stage capacitated facility location problem with multilevel capacities

  • S.I.: Advances in Theoretical and Applied Combinatorial Optimization
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Abstract

In this paper, the multi-product facility location problem in a two-stage supply chain is investigated. In this problem, the locations of depots (distribution centres) need to be determined along with their corresponding capacities. Moreover, the product flows from the plants to depots and onto customers must also be optimised. Here, plants have a production limit whereas potential depots have several possible capacity levels to choose from, which are defined as multilevel capacities. Plants must serve customer demands via depots. Two integer linear programming (ILP) models are introduced to solve the problem in order to minimise the fixed costs of opening depots and transportation costs. In the first model, the depot capacity is based on the maximum number of each product that can be stored whereas in the second one, the capacity is determined by the size (volume) of the depot. For large problems, the models are very difficult to solve using an exact method. Therefore, a matheuristic approach based on an aggregation approach and an exact method (ILP) is proposed in order to solve such problems. The methods are assessed using randomly generated data sets and existing data sets taken from the literature. The solutions obtained from the computational study confirm the effectiveness of the proposed matheuristic approach which outperforms the exact method. In addition, a case study arising from the wind energy sector in the UK is presented.

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Acknowledgements

The research leading to these results has received funding from the European Union Seventh Framework Programme under the agreement SCP2-GA-2013-614020 (LEANWIND: Logistic Efficiencies And Naval architecture for Wind Installations with Novel Developments).

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Authors and Affiliations

  1. Nottingham University Business School China, University of Nottingham Ningbo China, 199 Taikang East Road, Ningbo, 315100, China

    Chandra Ade Irawan

  2. Department of Mathematics, Centre for Operational Research and Logistics, University of Portsmouth, Lion Gate Building, Lion Terrace, Portsmouth, PO1 3HF, UK

    Dylan Jones

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  1. Chandra Ade Irawan
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Correspondence to Chandra Ade Irawan.

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Irawan, C.A., Jones, D. Formulation and solution of a two-stage capacitated facility location problem with multilevel capacities. Ann Oper Res 272, 41–67 (2019). https://doi.org/10.1007/s10479-017-2741-7

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  • DOI: https://doi.org/10.1007/s10479-017-2741-7

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