NDLI: An Inventory-Location Model: Formulation, Solution Algorithm and Computational Results

Content Provider	Springer Nature Link
Author	Daskin, Mark S. Coullard, Collette R. Shen, Zuo Jun Max
Copyright Year	2002
Abstract	We introduce a distribution center (DC) location model that incorporates working inventory and safety stock inventory costs at the distribution centers. In addition, the model incorporates transport costs from the suppliers to the DCs that explicitly reflect economies of scale through the use of a fixed cost term. The model is formulated as a non-linear integer-programming problem. Model properties are outlined. A Lagrangian relaxation solution algorithm is proposed. By exploiting the structure of the problem we can find a low-order polynomial algorithm for the non-linear integer programming problem that must be solved in solving the Lagrangian relaxation subproblems. A number of heuristics are outlined for finding good feasible solutions. In addition, we describe two variable forcing rules that prove to be very effective at forcing candidate sites into and out of the solution. The algorithms are tested on problems with 88 and 150 retailers. Computation times are consistently below one minute and compare favorably with those of an earlier proposed set partitioning approach for this model (Shen, 2000; Shen, Coullard and Daskin, 2000). Finally, we discuss the sensitivity of the results to changes in key parameters including the fixed cost of placing orders. Significant reductions in these costs might be expected from e-commerce technologies. The model suggests that as these costs decrease it is optimal to locate additional facilities.
Starting Page	83
Ending Page	106
Page Count	24
File Format	PDF
ISSN	02545330
Journal	Annals of Operations Research
Volume Number	110
Issue Number	1-4
e-ISSN	15729338
Language	English
Publisher	Kluwer Academic Publishers
Publisher Date	2002-01-01
Publisher Place	Dordrecht
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Theory of Computation Combinatorics Operation Research/Decision Theory
Content Type	Text
Resource Type	Article
Subject	Management Science and Operations Research

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4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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