An integrated model for facility location and technology acquisition

Abstract

This paper presents an analytical approach for simultaneous optimization of the facility location, capacity acquisition and technology selection decisions. The proposed approach can be useful when there is considerable interaction between these structural decisions, e.g., in global manufacturing companies. In these cases, a sequential optimization approach is bound to produce sub-optimal facility designs, and hence an integrated model is needed. We present a formal definition of the facility location and technology acquisition problem, and provide a basic model. We describe the analytical properties of the model, which led to the development of a solution procedure. We report on a set of experiments, and conclude that the computational performance of the proposed algorithm is quite satisfactory.