The maximum return-on-investment plant location problem

The standard plant location problem determines which plants to open from a set of potential sites in order to satisfy the demands at a set of customer vertices at a minimum total cost. However, the optimal solution may exceed a limit on investment costs imposed on the enterprise in a practical setti ng. This paper examines the plant location problem in an environment in whi ch the investment in plant and equipment is also an objective to be minimis ed. The problem is posed as a bicriterion model which examines the tradeoff between the sum of operational and investment costs and investment cost (O r total cost vs sunk cost). A weighting method is used to generate efficien t solutions, one of which is shown to maximise the return on investment. Th e integer-friendliness of the LP relaxation is investigated.