Two-echelon, multi-commodity supply chain network design with mode selection, lead-times and inventory costs

Designing distribution networks - as one of the most important strategic issues in supply chain management - has become the focus of research attention in recent years. This paper deals with a two-echelon supply chain network design problem in deterministic, single-period, multi-commodity contexts. The problem involves both strategic and tactical levels of supply chain planning including locating and sizing manufacturing plants and distribution warehouses, assigning the retailers' demands to the warehouses, and the warehouses to the plants, as well as selecting transportation modes.We have formulated the problem as a mixed integer programming model, which integrates the above mentioned decisions and intends to minimize total costs of the network including transportation, lead-times, and inventory holding costs for products, as well as opening and operating costs for facilities. Moreover, we have developed an efficient Lagrangian based heuristic solution algorithm for solving the real-sized problems in reasonable computational time.     

Risk management in uncapacitated facility location models with random demands

In this paper we consider a location-optimization problem where the classical uncapacitated facility location model is recast in a stochastic environment with several risk factors that make demand at each customer site probabilistic and correlated with demands at the other customer sites. Our primary contribution is to introduce a new solution methodology that adopts the mean–variance approach, borrowed from the finance literature, to optimize the “Value-at-Risk” (VaR) measure in a location problem. Specifically, the objective of locating the facilities is to maximize the lower limit of future earnings based on a stated confidence level. We derive a nonlinear integer program whose solution gives the optimal locations for the p facilities under the new objective. We design a branch-and-bound algorithm that utilizes a second-order cone program (SOCP) solver as a subroutine. We also provide computational results that show excellent solution times on small to medium sized problems.     

A new optimization model to support a bottom-up approach to facility design

The facility layout problem is typically solved in what is referred to as a “top-down approach” of block layout design followed by detailed layout determination. However, a number of research efforts recently have challenged this approach, producing a reformulated bottom-up approach to the facility layout problem. In this paper we consider the bottom-up approach, applying a tighter formulation than prior efforts and investigating the solvability limits of the new model. Empirical testing of the new bottom-up layout model indicates that although this model produces more usable output, as judged by industry experts, it is approximately three times harder to solve. Valid inequalities and special cases are identified to help improve the formulation's solvability.     

The heuristic concentration-integer and its application to a class of location problems

We propose a new metaheuristic called heuristic concentration-integer (HCI). This metaheuristic is a modified version of the heuristic concentration (HC), oriented to find good solutions for a class of integer programming problems, composed by problems in which p   elements must be selected from a larger set, and each element can be selected more than once. These problems are common in location analysis. The heuristic is explained and general instructions for rewriting integer programming formulations are provided, that make the application of HCI to these problems easier. As an example, the heuristic is applied to the maximal availability location problem (MALP), and the solutions are compared to those obtained using linear programming with branch and bound (LP+B&B)$(\mathrm{LP}+\mathrm{B}\&\mathrm{B})$. For one-third of the instances of MALP, LP+B&B$\mathrm{LP}+\mathrm{B}\&\mathrm{B}$ can be allowed to run until the computer is out of memory without termination, while HCI can find good solutions to the same instances in a reasonable time. In one such case, LP-IP was allowed to run for nearly 100 times longer than HCI and HCI still found a better solution. Furthermore, HCI found the optimal solution in 33.3% of cases and had an objective value gap of less than 1% in 76% of cases. In 18% of the cases, HCI found a solution that is better than LP+B&B. Therefore, in cases where LP+B&B$\mathrm{LP}+\mathrm{B}\&\mathrm{B}$ is unreasonable due to time or memory constraints, HCI is a valuable tool.     

Capacitated facility location problem with general setup cost

This paper presents an extension of the capacitated facility location problem (CFLP), in which the general setup cost functions and multiple facilities in one site are considered. The setup costs consist of a fixed term (site setup cost) plus a second term (facility setup costs). The facility setup cost functions are generally non-linear functions of the size of the facility in the same site. Two equivalent mixed integer linear programming (MIP) models are formulated for the problem and solved by general MIP solver. A Lagrangian heuristic algorithm (LHA) is also developed to find approximate solutions for this NP-hard problem. Extensive computational experiments are taken on randomly generated data and also well-known existing data (with some necessary modifications). The detailed results are provided and the heuristic algorithm is shown to be efficient.     

Heuristics for the bi-objective path dissimilarity problem

In this paper the path dissimilarity problem is considered. The problem has previously been studied within several contexts, the most popular of which is motivated by the need to select transportation routes for hazardous materials. The aim of this paper is to formally introduce the problem as a bi-objective optimization problem, in which a single solution consists of a set of p different paths, and two conflicting objectives arise, on one hand the average length of the paths must be kept low, and on the other hand the dissimilarity among the paths in the set should be kept high. Previous methods are reviewed and adapted to this bi-objective problem, thus we can compare the methods using the standard measures in multi-objective optimization. A new GRASP procedure is proposed and tested against the revised methods, and we show that it is able to create better approximations of efficient frontiers than existing methods.     

An Approximation Algorithm for the Fault Tolerant Metric Facility Location Problem

We consider a fault tolerant version of the metric facility location problem in which every city, j, is required to be connected to r _j facilities. We give the first non-trivial approximation algorithm for this problem, having an approximation guarantee of 3 · H _k , where k is the maximum requirement and H _k is the kth harmonic number. Our algorithm is along the lines of [2] for the generalized Steiner network problem. It runs in phases, and each phase, using a generalization of the primal–dual algorithm of [5] for the metric facility location problem, reduces the maximum residual requirement by one.     

An Approximation Algorithm for the Fault Tolerant Metric Facility Location Problem

We consider a fault tolerant version of the metric facility location problem in which every city, j, is required to be connected to r _j facilities. We give the first non-trivial approximation algorithm for this problem, having an approximation guarantee of 3 · H _k , where k is the maximum requirement and H _k is the kth harmonic number. Our algorithm is along the lines of [2] for the generalized Steiner network problem. It runs in phases, and each phase, using a generalization of the primal–dual algorithm of [5] for the metric facility location problem, reduces the maximum residual requirement by one.     

A bilevel fixed charge location model for facilities under imminent attack

We investigate a bilevel fixed charge facility location problem for a system planner (the defender) who has to provide public service to customers. The defender cannot dictate customer-facility assignments since the customers pick their facility of choice according to its proximity. Thus, each facility must have sufficient capacity installed to accommodate all customers for whom it is the closest one. Facilities can be opened either in the protected or unprotected mode. Protection immunizes against an attacker who is capable of destroying at most r unprotected facilities in the worst-case scenario. Partial protection or interdiction is not possible. The defender selects facility sites from m candidate locations which have different costs. The attacker is assumed to know the unprotected facilities with certainty. He makes his interdiction plan so as to maximize the total post-attack cost incurred by the defender. If a facility has been interdicted, its customers are reallocated to the closest available facilities making capacity expansion necessary. The problem is formulated as a static Stackelberg game between the defender (leader) and the attacker (follower). Two solution methods are proposed. The first is a tabu search heuristic where a hash function calculates and records the hash values of all visited solutions for the purpose of avoiding cycling. The second is a sequential method in which the location and protection decisions are separated. Both methods are tested on 60 randomly generated instances in which m ranges from 10 to 30, and r varies between 1 and 3. The solutions are further validated by means of an exhaustive search algorithm. Test results show that the defender's facility opening plan is sensitive to the protection and distance costs.     

Solving capacitated arc routing problems using a transformation to the CVRP

A well-known transformation by Pearn, Assad and Golden reduces a capacitated arc routing problem (CARP) into an equivalent capacitated vehicle routing problem (CVRP). However, that transformation is regarded as unpractical, since an original instance with r   required edges is turned into a CVRP over a complete graph with 3r+1$3r+1$ vertices. We propose a similar transformation that reduces this graph to 2r+1$2r+1$ vertices, with the additional restriction that a previously known set of r pairwise disconnected edges must belong to every solution. Using a recent branch-and-cut-and-price algorithm for the CVRP, we observed that it yields an effective way of attacking the CARP, being significantly better than the exact methods created specifically for that problem. Computational experiments obtained improved lower bounds for almost all open instances from the literature. Several such instances could be solved to optimality.     

Stochastic facility location with general long-run costs and convex short-run costs

This paper addresses the problem of minimizing the expected cost of locating a number of single product facilities and allocating uncertain customer demand to these facilities. The total costs consist of two components: firstly linear transportation cost and secondly the costs of investing in a facility as well as maintaining and operating it. These facility costs are general and non-linear in shape and could express both changing economies of scale and diseconomies of scale. We formulate the problem as a two-stage stochastic programming model where both demand and short-run costs may be uncertain at the investment time. We use a solution method based on Lagrangean relaxation, and show computational results for a slaughterhouse location case from the Norwegian meat industry.     

MIP models for connected facility location: A theoretical and computational study

This article comprises the first theoretical and computational study on mixed integer programming (MIP) models for the connected facility location problem (ConFL). ConFL combines facility location and Steiner trees: given a set of customers, a set of potential facility locations and some inter-connection nodes, ConFL searches for the minimum-cost way of assigning each customer to exactly one open facility, and connecting the open facilities via a Steiner tree. The costs needed for building the Steiner tree, facility opening costs and the assignment costs need to be minimized.     

A leader-follower game in competitive facility location

We address the problem of locating new facilities of a firm or franchise that enters a market where a competitor operates existing facilities. The goal of the new entrant firm is to decide the location and attractiveness of its new facilities that maximize its profit. The competitor can react by opening new facilities, closing existing ones, and adjusting the attractiveness levels of its existing facilities, with the aim of maximizing its own profit. The demand is assumed to be aggregated at certain points in the plane and the new facilities of both the firm and the competitor can be located at predetermined candidate sites. We employ the gravity-based rule in modeling the behavior of the customers where the probability that a customer visits a certain facility is proportional to the facility attractiveness and inversely proportional to the distance between the facility site and demand point. We formulate a bilevel mixed-integer nonlinear programming model where the firm entering the market is the leader and the competitor is the follower. We propose heuristics that combine tabu search with exact solution methods.     

New linearizations of quadratic assignment problems

New mixed-integer linear programming formulations are presented for the quadratic assignment problem, based on splittings of the coefficient matrices. Computational results are reported for medium-sized problem instances in the QAPLIB collection.     

Planning production using mathematical programming: The case of a woodturning company

Herein we present a case of production planning in a woodturning company. The company wishes to plan the turning of various types of products of different radii in a set of parallel machines (lathes) and with the following principal conditions: for each type of product there is a minimum production lot size; some lathes cannot manufacture every type of product; the production capacity of a lathe depends on the lathe itself and the type of product to be manufactured; the products are classified into families according to radius; and there is an intra-family setup time (for manufacturing different products that have the same radius) and an inter-family setup time (for consecutively manufacturing products that have different radii), which is longer; part of the production can be subcontracted; each type of product can be manufactured on different lathes and/or subcontracted; and the operators can work overtime, during which additional time they can simultaneously operate multiple lathes. The goal is to meet the demand at minimum cost, which includes the cost of any overtime plus that of any subcontracting. The problem was modelled and solved by mixed-integer linear programming (MILP). The company considers the results to be satisfactory.