Hostname: page-component-77c89778f8-n9wrp Total loading time: 0 Render date: 2024-07-17T18:00:49.240Z Has data issue: false hasContentIssue false
  • English
  • Français

A study on the budget constrained facility location model considering inventory management cost∗

Published online by Cambridge University Press:  07 June 2012

Hyun-Woong Jin
Hyun-Woong Jin*
Affiliation:
Department of Business Administration, Hannam University, 306-791 Daejeon, Korea. jin@hannam.ac.kr
Get access

Abstract

One of the important issues on the distribution network design is to incorporate inventory management cost into the facility location model. This paper deals with a network model making the decisions on the facility location such as the number of DCs and their locations as well as the decisions on the inventory management such as the ordering quantity and the level of safety stock at each DC. The considered model differs from the previous works by classifying the related costs into the operating cost and the investment cost. For this model, a solution procedure based on the Lagrangian relaxation method was proposed and tested for its effectiveness with various numerical examples.

Keywords

Locationinventory managementnonlinear programmingLagrangian relaxation
Type
Research Article
Information
RAIRO - Operations Research , Volume 46 , Issue 2 , April 2012 , pp. 107 - 123
Copyright
© EDP Sciences, ROADEF, SMAI, 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Beasley, J., Lagrangian heuristics for location problems. Eur. J. Oper. Res. 65 (1993) 383–399. Google Scholar
G. Cornuejols, G. Nemhauser and L. Wolsey, Discrete location theory. Wiley (1990).
Cortinhaland, M. and Captivo, M., Upper and lower bounds for the single source capacitated location problem. Eur. J. Oper. Res. 151 (2003) 333–351. Google Scholar
M. Daskin, Network and discrete location : models, algorithms and applications. Wiley (1995).
Daskin, M., Coullardand, C. and Shen, Z., An inventory-location model : formulation, solution algorithm and computational results. Ann. Oper. Res. 110 (2002) 83–106. Google Scholar
Dias, J., Captivo, M. and Climaco, J., Efficient primal-dual heuristic for a dynamic location problem. Comput. Oper. Res. 34 (2007) 1800–1823. Google Scholar
Drezner, T., Location of multiple retail facilities with limited budget constraints – in continuous space. J. Retail. Consum. Serv. 5 (1998) 173–184. Google Scholar
Erlenkotter, D., A dual-based procedure for uncapacitated facility location. Oper. Res. 26 (1978) 992–1009. Google Scholar
Erlenkotter, D., A comparative study of approaches to dynamic location problems. Eur. J. Oper. Res. 6 (1981) 133–143. Google Scholar
Fisher, M., The Lagrangian relaxation method for solving integer programming problems. Manage. Sci. 27 (1981) 1–18. Google Scholar
M. Gareyand and D. Johnson, Computers and intractability : A guide to the theory of NP-completeness. WH Freeman & Company (1990).
Ghosh, D., Neighborhood search heuristics for the uncapacitated facility location problem, Eur. J. Oper. Res. 150 (2003) 150–162. Google Scholar
F. Glover and M. Laguna, Tabu Search. Kluwer, Academic Publishers (1997).
Hill, R., Continuous-review, lost-sales inventory models with Poisson demand, a fixed lead time and no fixed order cost. Eur. J. Oper. Res. 176 (2007) 956–963. Google Scholar
Klose, A. and Gortz, S., A branch-and-price algorithm for the capacitated facility location problem. Eur. J. Oper. Res. 179 (2007) 1109–1125. Google Scholar
Kuehn, A. and Hamburger, M., A heuristic program for locating warehouses. Manage. Sci. 9 (1963) 643–666. Google Scholar
Martello, S. and Toth, P., An exact algorithm for large unbounded knapsack problems. Oper. Res. Lett. 9 (1990) 15–20. Google Scholar
Matheus, P. and Gelders, L., The (R, Q) inventory policy subject to a compound Poisson demand pattern. Int. J. Prod. Econ. 68 (2000) 307–317. Google Scholar
Melo, M., S. Nickel and F. Saldanha-da-Gama, Dynamic multi-commodity capacitated facility location : a mathematical modeling framework for strategic supply chain planning. Comput. Oper. Res. 33 (2005) 181–208. Google Scholar
Melo, M., S. Nickel and F. Saldanha-da-Gama, Facility location and supply chain management – A review. Eur. J. Oper. Res. 196 (2009) 401–412. Google Scholar
Michel, L. and Hentenryck, P., A simple tabu search for warehouse location. Eur. J. Oper. Res. 157 (2004) 576–591. Google Scholar
Miranda, P. and Garrido, R., Incorporating inventory control decisions into a strategic distribution network design model with stochastic demand. Transp. Res. Part E 40 (2004) 183–207. Google Scholar
D. Montgonery, G. Rungerand and N. Hubele, Engineering statistics. Wiley (1998).
Ozsen, L., Coullard, C. and Daskin, M., Capaciated warehouse location model with risk pooling. Nav. Res. Logist. 55 (2008) 295–312. Google Scholar
Park, S., Lee, T. and Sung, C., A three-level supply chain network design model with risk-pooling and lead times. Transp. Res. Part E 46 (2010) 563–581. Google Scholar
Shen, Z. and Qi, L., Incorporating inventory and routing costs in strategic location models. Eur. J. Oper. Res. 179 (2007) 372–389. Google Scholar
Shen, Z., Coullard, C. and Daskin, M., A joint location-inventory model. Transp. Sci. 37 (2003) 40–55. Google Scholar
Sun, M., Solving the uncapacitated facility location problemusing tabu search. Comput. Oper. Res. 33 (2006) 2563–2589. Google Scholar
Wang, Q., Batta, R., Bhadury, J. and Rump, C., Budget constrained location problem with opening and closing of facilities. Comput. Oper. Res. 30 (2003) 2047–2060.Google Scholar