Plant location and procurement planning in knockdown production systems

We consider an integrated problem of plant location and capacity planning f or components procurement in knockdown production systems. The problem is t hat of determining the schedule of opening components manufacturing plants, plans for acquisition of capacities in opened components manufacturing pla nts, and plans for components procurement in final assembly plants with the objective of minimizing the sum of fixed costs for opening plants; acquisi tion and operation costs of facilities, and delivery and subcontracting cos ts of components. The problem is formulated as a mixed integer linear progr am and solved by a two-stage solution procedure. In the solution procedure, the problem is decomposed into two tractable subproblems and these subprob lems are solved sequentially. In the first stage, a dynamic plant location problem is solved using a cut and branch algorithm based on Gomory cuts, wh ile a multiperiod capacity planning problem is solved in the second stage b y a heuristic algorithm that uses a cut and branch algorithm and a variable reduction scheme. The solution procedure is tested on problems of a practi cal size and results show that the procedure gives reasonably good solution s.