The multi-period incremental service facility location problem

Abstract

In this paper we introduce the multi-period incremental service facility location problem where the goal is to set a number of new facilities over a finite time horizon so as to cover dynamically the demand of a given set of customers. We prove that the coefficient matrix of the allocation subproblem that results when fixing the set of facilities to open is totally unimodular. This allows to solve efficiently the Lagrangean problem that relaxes constraints requiring customers to be assigned to open facilities. We propose a solution approach that provides both lower and upper bounds by combining subgradient optimization to solve a Lagrangean dual with an ad hoc heuristic that uses information from the Lagrangean subproblem to generate feasible solutions. Numerical results obtained in the computational experiments show that the obtained solutions are very good. In general, we get very small percent gaps between upper and lower bounds with little computation effort.