Wei Huang, H. Edwin Romeijn, Joseph Geunes
The Continuous-time Single-Sourcing Problem with production and inventory capacity constraints and expansion opportunities
This paper develops a new model for allocating demand from
retailers (or customers) to a set of production/storage
facilities. A producer manufactures a product in multiple
production facilities, and faces demand from a set of retailers.
The objective is to decide which of the production facilities
should satisfy each retailer's demand, in order minimize total
production, inventory holding, and assignment costs (where the
latter may include, for instance, variable production costs and
transportation costs). Demand occurs continuously in time at a
deterministic rate at each retailer, while each production
facility faces fixed-charge production costs and linear holding
costs. We first consider an uncapacitated model, which we
generalize to allow for production or storage capacities. We then
explore situations with capacity expansion opportunities. Our
solution approach employs a column generation procedure, as well
as greedy and local improvement heuristic approaches. A broad
class of randomly generated test problems demonstrates that these
heuristics find high quality solutions for this large-scale
cross-facility planning problem using a modest amount of
computation time.