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Abstract
Purpose - Two Stage Capacitated Warehouse Location Problem (TSCWLP) is having the characteristics similar to bulk commodity distribution problems. This is a type of facility location problem explored by the authors for last two decades. This paper studies a new method of solving TSCWLP.
Design/methodology/approach - In this approach, TSCWLP is vertically decomposed into smaller problems, which is attained by relaxing the associated flow balance constraints. This leads to three different versions of Capacitated Plant Location Problem (CPLP) referred as RHS_CPLP, MID_CPLP and LHS_CPLP here. A variety of Linear and Lagrangian relaxations of LHS_CPLP and RHS_CPLP are developed and a comparison of their relative strength is done. Different (strong and weak) linear relaxations of MID_CPLP are formulated and their relative strength is compared. Finally, a method is developed for solving complete TSCWLP with the help of LHS_CPLP, MID_CPLP and RHS_CPLP.
Findings - This paper identifies the need to develop computationally effective Lagrangian relaxation for MID_CPLP. The paper is also enriched with computational experiences on a variety of problems.
Keywords: TSCWLP, Location, Transportation, Distribution
Paper type: Research Paper
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Introduction
In any organization, one of the most important strategic decisions is to locate facilities viz. factories, plants or warehouses. While locating a facility, the most prioritized criterion is a good service level. However, achievement of an economic optimality is also a key decisive factor. Based on the number of stages between the producing facility and the market, there are different types of facility location problems like simple plant location problem, single stage / two stage warehouse location problem and multistage facility location problem. A latest review of literature on location problems can be found in Sahin and Sural (2007) and ReVelle et al. (2008). Multistage warehouse location problems are frequently occurring in real life (see: Geoffrion and Graves, 1974; Sharma, 1991; and Sharma, 1996). In this work, we will discuss Two Stage Capacitated Warehouse Location Problem (TSCWLP). If the distance between the plants and markets is too high and there are two sets of warehouses between them, their intermediate distances (plants - warehouse 1 (whs-1) - warehouse 2 (whs-2) - markets) become comparatively less. Here it is assumed that warehouses have finite capacity and single commodity is considered for distribution.