A Branch-and-Price Algorithm for Facility Location with General Facility Cost Functions

Abstract

Most existing facility location models assume that the facility cost is either a fixed setup cost or made up of a fixed setup and a problem-specific concave or submodular cost term. This structural property plays a critical role in developing fast branch-and-price, Lagrangian relaxation, constant ratio approximation, and conic integer programming reformulation approaches for these NP-hard problems. Many practical considerations and complicating factors, however, can make the facility cost no longer concave or submodular. By removing this restrictive assumption, we study a new location model that considers general nonlinear costs to operate facilities in the facility location framework. The general model does not even admit any approximation algorithms unless P = NP because it takes the unsplittable hard-capacitated metric facility location problem as a special case. We first reformulate this general model as a set-partitioning model and then propose a branch-and-price approach. Although the corresponding pricing problem is NP-hard, we effectively analyze its structural properties and design an algorithm to solve it efficiently. The numerical results obtained from two implementation examples of the general model demonstrate the effectiveness of the solution approach, reveal the managerial implications, and validate the importance to study the general framework.