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A study on the budget constrained facility location modelconsidering inventory management cost∗

Published online by Cambridge University Press:  07 June 2012

Hyun-Woong Jin
Hyun-Woong Jin*
Affiliation:
Department of Business Administration, Hannam University, 306-791 Daejeon, Korea. [email protected]
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Abstract

One of the important issues on the distribution network design is to incorporateinventory management cost into the facility location model. This paper deals with anetwork model making the decisions on the facility location such as the number of DCs andtheir locations as well as the decisions on the inventory management such as the orderingquantity and the level of safety stock at each DC. The considered model differs from theprevious works by classifying the related costs into the operating cost and the investmentcost. For this model, a solution procedure based on the Lagrangian relaxation method wasproposed and tested for its effectiveness with various numerical examples.

Keywords

Locationinventory managementnonlinear programmingLagrangian relaxation
Type
Research Article
Information
RAIRO - Operations Research , Volume 46 , Issue 2 , April 2012 , pp. 107 - 123
Copyright
© EDP Sciences, ROADEF, SMAI, 2012

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