On a general network location-production-allocation problem

In this paper the authors consider a network location-production-allocation problem in which demands are related to prices at markets. Profit maximization is achieved through the simultaneous determinations of plane locations and shipments between plants and markets. The authors show that even subproblems of some special cases of this general problem are NP-hard. For the NP-hard plant allocation problem, both a dynamic programming formulation and two heuristic algorithms are proposed. Empirical results reveal that both heuristic algorithms are attractive in practice, with one of them performing exceptionally well. The authors also show that the problem has a class of interesting special cases which can be solved in polynomial time.