Formulation and solution of a two-stage capacitated facility location problem with multilevel capacities

Chandra Ade Irawan, Dylan Jones

Research output: Journal PublicationArticlepeer-review

17 Citations (Scopus)
25 Downloads (Pure)


In this paper, the multi-product facility location problem in a two-stage supply chain is investigated. In this problem, the locations of depots (distribution centres) need to be determined along with their corresponding capacities. Moreover, the product flows from the plants to depots and onto customers must also be optimised. Here, plants have a production limit whereas potential depots have several possible capacity levels to choose from, which are defined as multilevel capacities. Plants must serve customer demands via depots. Two integer linear programming (ILP) models are introduced to solve the problem in order to minimise the fixed costs of opening depots and transportation costs. In the first model, the depot capacity is based on the maximum number of each product that can be stored whereas in the second one, the capacity is determined by the size (volume) of the depot. For large problems, the models are very difficult to solve using an exact method. Therefore, a matheuristic approach based on an aggregation approach and an exact method (ILP) is proposed in order to solve such problems. The methods are assessed using randomly generated data sets and existing data sets taken from the literature. The solutions obtained from the computational study confirm the effectiveness of the proposed matheuristic approach which outperforms the exact method. In addition, a case study arising from the wind energy sector in the UK is presented.

Original languageEnglish
Pages (from-to)41-67
Number of pages27
JournalAnnals of Operations Research
Issue number1-2
Publication statusPublished - 1 Jan 2019


  • Facility location
  • ILP
  • Matheuristic

ASJC Scopus subject areas

  • General Decision Sciences
  • Management Science and Operations Research


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