The maximum return-on-investment plant location problem

J Brimberg and C ReVelle
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J Brimberg: University of Prince Edward Island
C ReVelle: The Johns Hopkins University

Journal of the Operational Research Society, 2000, vol. 51, issue 6, 729-735

Abstract: Abstract The standard plant location problem determines which plants to open from a set of potential sites in order to satisfy the demands at a set of customer vertices at a minimum total cost. However, the optimal solution may exceed a limit on investment costs imposed on the enterprise in a practical setting. This paper examines the plant location problem in an environment in which the investment in plant and equipment is also an objective to be minimised. The problem is posed as a bicriterion model which examines the tradeoff between the sum of operational and investment costs and investment cost (or total cost vs sunk cost). A weighting method is used to generate efficient solutions, one of which is shown to maximise the return on investment. The integer-friendliness of the LP relaxation is investigated.

Keywords: plant location; investment; multicriteria; integer-friendliness (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (8)

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DOI: 10.1057/palgrave.jors.2600943

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