Article ID: | iaor20073591 |
Country: | United States |
Volume: | 51 |
Issue: | 7 |
Start Page Number: | 1151 |
End Page Number: | 1164 |
Publication Date: | Jul 2005 |
Journal: | Management Science |
Authors: | Goffin Jean-Louis, Elhedhli Samir |
Keywords: | programming: integer |
The production–distribution system design is an integral part of the general supply chain design. This paper proposes a novel solution methodology for this problem that is based on Lagrangean relaxation, interior-point methods, and branch and bound. Unlike classical approaches, Lagrangean relaxation is applied in a two-level hierarchy, branch and bound is based on a Lagrangean lower bound and column generation (branch and price), while interior-point methods are used within a cutting-plane context (analytic centre cutting-plane method – ACCPM). Numerical results demonstrate that the two-level approach outperforms the classical approach and provides a very sharp lower bound that is the (proven) optimal in most cases.