Article ID: | iaor20062320 |
Country: | United Kingdom |
Volume: | 55 |
Issue: | 12 |
Start Page Number: | 1275 |
End Page Number: | 1280 |
Publication Date: | Dec 2004 |
Journal: | Journal of the Operational Research Society |
Authors: | Adlakha V., Kowalski K. |
Keywords: | programming: nonlinear |
The fixed-charge problem is a non-linear programming problem of practical interest in business and industry. The sourced-induced fixed-charge transportation problem (SIFCTP) is a variation of the regular fixed-charge transportation problem (FCTP) in which a fixed cost is incurred for every supply point that is used in the solution, along with a variable cost that is proportional to the amount shipped. This problem is significantly different from the widely studied FCTP, where a fixed cost is incurred upon activation of a route. The introduction of the fixed costs in addition to variable costs results in the objective function being a step function. Therefore, fixed-charge problems are usually solved using sophisticated analytical or computer software. This paper deviates from that approach. It presents a computationally simple algorithm for the solution of source-induced fixed-charge problems. The results of empirical tests of the effectiveness of the proposed algorithm are presented.