Let G=(V,E) be a connected graph expressing a distribution network. The elements of D⊆V represent demand centres, while S⊆V contains the candidate supply centers. To each node vi∈D, there is associated a demand di and to each element vj of S the couple (ej,cj), where ej and cj are the set up cost and the capacity of vj respectively. Furthermore, the distance for every arc (vi,vj)∈E and the transportation cost of the product unit are given. In this paper an algorithm is developed which determines a subset of S in order to satisfy the demands with a minimum distribution cost, so that the total set up cost of supply centers does not exceed a given budget.
