Efficient production–distribution system design

Efficient production–distribution system design

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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: ,
Keywords: programming: integer
Abstract:

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.

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