A fractional programming model for international facility location

Abstract

This paper presents a new mixed integer non-linear fractional programming model for multi-commodity, multi-period, budget constrained and capacitated global supply chain design problem. Our model simultaneously optimizes the facility location, capacity acquisition, and production-distribution decisions so as to maximize the profitability of the total investment over a planning horizon. The model is also compared with the profit-maximization model and the cost-minimization model. A branch-and-bound method and a rounding heuristic algorithm are developed to tackle the problem at hand. The computational results of solving 30 instances generated randomly show that our proposed model differs fundamentally from the other models and the rounding heuristic algorithm provides an efficient solution.