A Large-Scale Multilocation Capacity Planning Model.

In this memorandum, a large-scale multilocation capacity planning model is described. The model chooses a multiperiod schedule of openings, expansions, and closings of facilities, and assigns demand locations to these facilities. Although generic in nature, this model was developed to plan the evolution of material logistics systems over time. In order to have a truly practical tool, numerous features are considered including existing configuration, arbitrary demand patterns, concave operating costs, single- source assignments, demand location reassignment costs, and others. Such capacity planning models are highly combinatorial in nature, and are solved, in general, by heuristics. Our solution method has three major modules. First, an initial solution is generated by solving successively single-period problems using network optimization techniques complemented by other heuristics. Next, opening and closing decisions are adjusted and improved. Finally, demand location assignment decisions throughout the planning horizon are modified. The heuristic was tested on many problems of various sizes; computational experience is described.