A cyclic allocation model for the inventory-modulated capacitated location problem

ABSTRACT

Hard capacity constraints have been used for decades in facility location modelling and planning. However, such constraints are unrealistic as a variety of operational tools can be used to extend capacity in the short term. To address this, the Inventory-Modulated Capacitated Location Problem (IMCLP) uses inventory as a method of mitigating the hard capacity constraints, but enforces single sourcing. In this paper, we examine a cyclic, day-specific allocation approach to assigning demand sites to processing facilities in the IMCLP. This enables the model to develop a day-of-the-week allocation policy that considers day-to-day variations in the daily processing capacity levels of a set of candidate processing facilities and/or systematic day-to-day demand variations. We demonstrate that allowing demands at a particular site to be allocated to multiple processing facilities in such a manner can be a cost-effective operational tool.

KEYWORDS:

• Location
• capacitated
• daily demands
• inventory
• backlog
• mixed-integer linear program

Acknowledgments

The work of the first author was supported in part by the National Science Foundation Graduate Research Fellowship Program under Grant No. DEG 1256260. The opinions expressed in the paper do not necessarily reflect the views of the National Science Foundation.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

National Science Foundation Graduate Research Fellowship Program [grant number DEG 1256260]