A facility neighborhood search heuristic for capacitated facility location with single‐source constraints and flexible demand

We consider a generalization of the well‐known capacitated facility location problem with single source constraints in which customer demand contains a flexible dimension. This work focuses on providing fast and practically implementable optimization‐based heuristic solution methods for very large scale problem instances. We offer a unique approach that utilizes a high‐quality efficient heuristic within a neighborhood search to address the combined assignment and fixed‐charge structure of the underlying optimization problem. We also study the potential benefits of combining our approach with a so‐called very large‐scale neighborhood search (VLSN) method. As our computational test results indicate, our work offers an attractive solution approach that can be tailored to successfully solve a broad class of problem instances for facility location and similar fixed‐charge problems.