A multi-period facility location problem with modular capacity adjustments and flexible demand fulfillment

Isabel Correia, Teresa Melo

Research output: Contribution to journalArticle

9 Citations (Scopus)

Abstract

We consider a multi-period facility location problem that takes into account changing trends in customer demands and costs. To this end, new facilities can be established at pre-specified potential locations and initially existing facilities can be closed over a planning horizon. Furthermore, facilities operate with modular capacities that can be expanded or contracted over multiple periods. A distinctive feature of our problem is that two customer segments are considered with different sensitivity to delivery lead times. Customers in the first segment require timely demand satisfaction, whereas customers in the second segment tolerate late deliveries. A tardiness penalty cost is incurred to each unit of demand that is satisfied with delay. We propose two alternative mixed-integer linear formulations to redesign the facility network over the planning horizon at minimum cost. Additional inequalities are developed to enhance the original formulations. A computational study is performed with randomly generated instances and using a general-purpose solver. Useful insights are derived from analyzing the impact of several parameters on network redesign decisions and on the overall cost, such as different demand patterns and varying values for the maximum delivery delay tolerated by individual customers.

Original languageEnglish
Pages (from-to)307-321
Number of pages15
JournalComputers and Industrial Engineering
Volume110
DOIs
Publication statusPublished - 1 Aug 2017

Fingerprint

Costs
Planning
Customer satisfaction

Keywords

  • Capacity expansion and contraction
  • Delivery lateness
  • Facility location
  • Mixed-integer linear models
  • Multi-period

Cite this

@article{0014cdd9a81147da8daf317faec1a88a,
title = "A multi-period facility location problem with modular capacity adjustments and flexible demand fulfillment",
abstract = "We consider a multi-period facility location problem that takes into account changing trends in customer demands and costs. To this end, new facilities can be established at pre-specified potential locations and initially existing facilities can be closed over a planning horizon. Furthermore, facilities operate with modular capacities that can be expanded or contracted over multiple periods. A distinctive feature of our problem is that two customer segments are considered with different sensitivity to delivery lead times. Customers in the first segment require timely demand satisfaction, whereas customers in the second segment tolerate late deliveries. A tardiness penalty cost is incurred to each unit of demand that is satisfied with delay. We propose two alternative mixed-integer linear formulations to redesign the facility network over the planning horizon at minimum cost. Additional inequalities are developed to enhance the original formulations. A computational study is performed with randomly generated instances and using a general-purpose solver. Useful insights are derived from analyzing the impact of several parameters on network redesign decisions and on the overall cost, such as different demand patterns and varying values for the maximum delivery delay tolerated by individual customers.",
keywords = "Capacity expansion and contraction, Delivery lateness, Facility location, Mixed-integer linear models, Multi-period",
author = "Isabel Correia and Teresa Melo",
note = "sem pdf conforme despacho. FCT - Fundacao para a Ciencia e a Tecnologia (Portuguese Foundation for Science and Technology) through the project UID/MAT/00297/2013 (CMA/FCT/UNL)",
year = "2017",
month = "8",
day = "1",
doi = "10.1016/j.cie.2017.06.003",
language = "English",
volume = "110",
pages = "307--321",
journal = "Computers & Industrial Engineering",
issn = "0360-8352",
publisher = "Elsevier Science B.V., Amsterdam.",

}

A multi-period facility location problem with modular capacity adjustments and flexible demand fulfillment. / Correia, Isabel; Melo, Teresa.

In: Computers and Industrial Engineering, Vol. 110, 01.08.2017, p. 307-321.

Research output: Contribution to journalArticle

TY - JOUR

T1 - A multi-period facility location problem with modular capacity adjustments and flexible demand fulfillment

AU - Correia, Isabel

AU - Melo, Teresa

N1 - sem pdf conforme despacho. FCT - Fundacao para a Ciencia e a Tecnologia (Portuguese Foundation for Science and Technology) through the project UID/MAT/00297/2013 (CMA/FCT/UNL)

PY - 2017/8/1

Y1 - 2017/8/1

N2 - We consider a multi-period facility location problem that takes into account changing trends in customer demands and costs. To this end, new facilities can be established at pre-specified potential locations and initially existing facilities can be closed over a planning horizon. Furthermore, facilities operate with modular capacities that can be expanded or contracted over multiple periods. A distinctive feature of our problem is that two customer segments are considered with different sensitivity to delivery lead times. Customers in the first segment require timely demand satisfaction, whereas customers in the second segment tolerate late deliveries. A tardiness penalty cost is incurred to each unit of demand that is satisfied with delay. We propose two alternative mixed-integer linear formulations to redesign the facility network over the planning horizon at minimum cost. Additional inequalities are developed to enhance the original formulations. A computational study is performed with randomly generated instances and using a general-purpose solver. Useful insights are derived from analyzing the impact of several parameters on network redesign decisions and on the overall cost, such as different demand patterns and varying values for the maximum delivery delay tolerated by individual customers.

AB - We consider a multi-period facility location problem that takes into account changing trends in customer demands and costs. To this end, new facilities can be established at pre-specified potential locations and initially existing facilities can be closed over a planning horizon. Furthermore, facilities operate with modular capacities that can be expanded or contracted over multiple periods. A distinctive feature of our problem is that two customer segments are considered with different sensitivity to delivery lead times. Customers in the first segment require timely demand satisfaction, whereas customers in the second segment tolerate late deliveries. A tardiness penalty cost is incurred to each unit of demand that is satisfied with delay. We propose two alternative mixed-integer linear formulations to redesign the facility network over the planning horizon at minimum cost. Additional inequalities are developed to enhance the original formulations. A computational study is performed with randomly generated instances and using a general-purpose solver. Useful insights are derived from analyzing the impact of several parameters on network redesign decisions and on the overall cost, such as different demand patterns and varying values for the maximum delivery delay tolerated by individual customers.

KW - Capacity expansion and contraction

KW - Delivery lateness

KW - Facility location

KW - Mixed-integer linear models

KW - Multi-period

UR - http://www.scopus.com/inward/record.url?scp=85020936604&partnerID=8YFLogxK

U2 - 10.1016/j.cie.2017.06.003

DO - 10.1016/j.cie.2017.06.003

M3 - Article

VL - 110

SP - 307

EP - 321

JO - Computers & Industrial Engineering

JF - Computers & Industrial Engineering

SN - 0360-8352

ER -