The plant location and flexible technology acquisition problem

In many industries, production–distribution networks have become more complex due to globalization. In particular, increasing interdependencies among structural decisions call for the development of integrated models. In this paper, we present a mathematical model for simultaneous optimization of the plant location, capacity acquisition and technology selection decisions in a multi-commodity environment. The proposed model represents the possible scale and scope economies associated with manufacturing technology alternatives. The problem is formulated as a mixed integer nonlinear program with concave costs. We developed an exact and three heuristic solution procedures. Using these procedures, we are able to solve fairly large facility design problems with reasonable computational effort.