RAIRO - Operations Research

Table of Contents - April 2012 - Volume 46, Issue 02  

Research Article

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

Hyun-Woong Jin

Department of Business Administration, Hannam University, 306-791 Daejeon, Korea. jin@hannam.ac.kr

Abstract

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

(Received March 26 2011)

(Accepted April 17 2012)

(Online publication June 07 2012)

Key Words:

  • Location;
  • inventory management;
  • nonlinear programming;
  • Lagrangian relaxation

Mathematics Subject Classification:

  • 35L05;
  • 35L70

Footnotes

∗  This paper has been supported by the 2011 HANNAM University Research Fund.