Most literature on facility location assumes a fixed set-up cost and a linear variable cost. However, as production volume increases, cost savings are achieved through economies of scale, and then when production exceeds a certain capacity level, congestion occurs and costs start to increase significantly. This leads to an S-shaped cost function that makes the location-allocation decisions challenging. This thesis presents a nonlinear mixed integer programming formulation for the facility location problem with economies of scale and congestion and proposes a Lagrangian solution approach. Testing on a variety of functions and cost settings reveals the efficiency of the proposed approach in finding solutions that are within an average gap of 3.79% from optimal.
| Identifer | oai:union.ndltd.org:WATERLOO/oai:uwspace.uwaterloo.ca:10012/5469 |
| Date | January 2010 |
| Creators | Lu, Da |
| Source Sets | University of Waterloo Electronic Theses Repository |
| Language | English |
| Detected Language | English |
| Type | Thesis or Dissertation |
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