Volume 46, Number 2, April-June 2012
|Page(s)||107 - 123|
|Published online||07 June 2012|
A study on the budget constrained facility location model considering inventory management cost∗
Department of Business Administration, Hannam
Accepted: 17 April 2012
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.
Mathematics Subject Classification: 35L05 / 35L70
Key words: Location / inventory management / nonlinear programming / Lagrangian relaxation
© EDP Sciences, ROADEF, SMAI, 2012
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