A compact model and tight bounds for a combined location–routing problem

This paper considers a combined location–routing problem. We define an auxiliary network and give a compact formulation of the problem in terms of finding a set of paths in the auxiliary network that fulfill additional constraints. The LP solution to the considered model provides an initial lower bound and is also used in a rounding procedure that provides the initial solution for a Tabu search heuristic. Additionally, we propose a different lower bound based on the structure of the problem. The results of computational testing on a set of randomly generated instances are promising.