Close-Enough Facility Location

Abstract

This paper introduces the concept of close-enough in the context of facility location. It is assumed that customers are willing to move from their homes to close-enough pickup locations. Given that the number of pickup locations is expanding every day, it is assumed that pickup locations can be placed everywhere. Conversely, the set of potential location for opening facilities is discrete as well as the set of customers. Opening facilities and pickup points entails an installation budget and a distribution cost to transport goods from facilities to customers and pickup locations. The (p,t)-Close-Enough Facility Location Problem is the problem of deciding where to locate p facilities among the finite set of candidates, where to locate t pickup points in the plane and how to allocate customers to facilities or to pickup points so that all the demand is satisfied and the total cost is minimized. In this paper, it is proved that the set of initial infinite number of pickup locations is finite in practice. Two mixed-integer linear programming models are proposed for the discrete problem. The models are enhanced with valid inequalities and a branch and price algorithm is designed for the most promising model. The findings of a comprehensive computational study reveal the performance of the different models and the branch and price algorithm and illustrate the value of pickup locations.