A tabu search heuristic procedure for the fixed charge transportation problem

We develop a tabu search approach for the fixed charge transportation (FCT) problem using recency based and frequency based memories, together with two strategies for each of the intermediate and long term memory processes, making use of a network based implementation of the simplex method as the local search method. Our approach is evaluated computationally on randomly generated problems of different sizes and of different ranges of magnitude of fixed costs relative to variable costs. Comparisons are made with two leading methods previously proposed, one in the category of exact methods and one in the category of heuristic methods. Our tabu search procedure obtains optimal or near-optimal solutions more than a thousand times faster than the exact solution algorithm for simple problems, and thoroughly dominates the exact algorithm on all dimensions for more complex problems. Compared to the heuristic approach, on very small and easy test problems the tabu search procedure required about the same amount of solution time and found solutions at least as good. However, for larger problems and for problems with higher fixed relative to variable costs, the tabu search procedure was 3–4 times faster than the competing heuristic, and found significantly better solutions in all cases.