One of the important issues on the distribution network design is to incorporate inventory management cost into the facility location model. This paper deals with a network model making the decisions on the facility location such as the number of DCs and their locations as well as the decisions on the inventory management such as the ordering quantity and the level of safety stock at each DC. The considered model differs from the previous works by classifying the related costs into the operating cost and the investment cost. For this model, a solution procedure based on the Lagrangian relaxation method was proposed and tested for its effectiveness with various numerical examples.

Keywords: location, inventory management, nonlinear programming, lagrangian relaxation

@article{RO_2012__46_2_107_0, author = {Jin, Hyun-Woong}, title = {A study on the budget constrained facility location model considering inventory management cost}, journal = {RAIRO - Operations Research - Recherche Op\'erationnelle}, pages = {107--123}, publisher = {EDP-Sciences}, volume = {46}, number = {2}, year = {2012}, doi = {10.1051/ro/2012011}, mrnumber = {2955460}, zbl = {1248.90009}, language = {en}, url = {http://archive.numdam.org/articles/10.1051/ro/2012011/} }

TY - JOUR AU - Jin, Hyun-Woong TI - A study on the budget constrained facility location model considering inventory management cost JO - RAIRO - Operations Research - Recherche Opérationnelle PY - 2012 SP - 107 EP - 123 VL - 46 IS - 2 PB - EDP-Sciences UR - http://archive.numdam.org/articles/10.1051/ro/2012011/ DO - 10.1051/ro/2012011 LA - en ID - RO_2012__46_2_107_0 ER -

%0 Journal Article %A Jin, Hyun-Woong %T A study on the budget constrained facility location model considering inventory management cost %J RAIRO - Operations Research - Recherche Opérationnelle %D 2012 %P 107-123 %V 46 %N 2 %I EDP-Sciences %U http://archive.numdam.org/articles/10.1051/ro/2012011/ %R 10.1051/ro/2012011 %G en %F RO_2012__46_2_107_0

Jin, Hyun-Woong. A study on the budget constrained facility location model considering inventory management cost. RAIRO - Operations Research - Recherche Opérationnelle, Volume 46 (2012) no. 2, pp. 107-123. doi : 10.1051/ro/2012011. http://archive.numdam.org/articles/10.1051/ro/2012011/

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