The pq-median problem of Serra and ReVelle seeks to locate hierarchical facilities at two levels so as to obtain a coherent structure. Coherence requires that the entire area assigned to a facility at the inferior level be assigned to one and the same facility at the next higher level of the hierarchy. Although optimal solutions can be obtained by means of solving biobjective integer linear programs, large problems are likely to require heuristics. Here we present a new heuristic that combines the generation of points, by means of a ‘directed’ branching procedure with the final selection of points, using the FDH-technique. We further compare our new heuristic with the two most relevant heuristics proposed by Serra and ReVelle.
