A MULTICOMMODITY, MULTIPLANT, CAPACITATED FACILITY LOCATION PROBLEM -FORMULATION AND EFFICIENT HEURISTIC SOLUTION

Distribution system design problems commonly occurs in the following f orm: A number of production plants supply warehouses with multiple pro ducts which in turn distribute these products to customer outlets base d on their specified demand quantities of the different products. It i s required to select the optimum set of plants and warehouses from a p otential set and plan production capacities, warehouse capacities and quantities shipped so that the total operating costs of the distributi on network are minimized. This paper is a computational study to inves tigate the value of coordinating production and distribution planning. We present a mixed integer programming formulation for the capacitate d plant and warehouse supply chain management problem and propose an e fficient heuristic based on Lagrangian relaxation of the problem. (C) 1998 Elsevier Science Ltd. All rights reserved.