Restructuring Facility Networks under Economy of Scales

Marta Sofia R. Monteiro (), Dalila B. M. M. Fontes () and Fernando A. C. C. Fontes ()
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Marta Sofia R. Monteiro: Faculdade de Economia, Universidade do Porto, LIAAD-INESC L.A.,UP
Dalila B. M. M. Fontes: Faculdade de Economia, Universidade do Porto, LIAAD-INESC L.A.,UP
Fernando A. C. C. Fontes: Faculdade de Engenharia, Universidade do Porto, ISR-Porto, UP

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: In this work we address the facility network restructuring problem. This problem is closely related to location/allocation and set covering problems. However, none of the above includes all its complexity nor involves all the decision types. Due to the presence of economies of scale, another type of complexity arises since we must minimize a concave cost function. Therefore we are extending current literature by considering a new problem. For this problem a local search heuristic is proposed, where an initially feasible solution, obtained by solving a related linear problem, is improved by a slope scaling procedure and then by drop and swap operations. Computational results showing the effectiveness and efficiency of the solution procedure are reported.

Keywords: Location; Allocation; Covering; Concave Optimization; Heuristics (search for similar items in EconPapers)
JEL-codes: C44 C61 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2009-06
New Economics Papers: this item is included in nep-cmp and nep-ure
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