Facility location and capacity acquisition: an integrated approach

Abstract

The facility location and capacity acquisition decisions are intertwined, especially within the international context where capacity acquisition costs are location dependent. A review of the relevant literature however, reveals that the facility location and the capacity acquisition problems have been dealt with separately. Thus, an integrated approach for simultaneous optimization of these strategic decisions is presented. Analytical properties of the arising model are investigated and an algorithm for solving the problem is devised. Encouraging computational results are reported.