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Mathematical models for selection of optimal place and size of connections considering the time-value of money

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  • Rastpour, Amir
  • Esfahani, M.S.

Abstract

In this study, mathematical models to select the optimal place and size of connections are studied considering the time-value of money. A connection is defined as a part that links different sets of departments through which some interdepartmental material flows must go [S. Huang, R. Batta, R. Nagi, Variable capacity sizing and selection of connections in a facility layout, IIE Transactions 35 (2003) 49-59]. The goal of this paper is to select the location and capacity of the connections so as to minimize the sum of material movement, connection installation and connection maintenance costs minus the salvage value considering the time-value of money. Mixed integer nonlinear programming models are developed for discrete and continuous capacity options. The mixed integer nonlinear programming models of the continuous cases are reduced to mixed integer linear programming models, using proved properties of these problems. For the discrete capacity cases, a computational example and sensitivity analysis of the solutions with respect to possible future changes in the values of parameters are developed and presented.

Suggested Citation

  • Rastpour, Amir & Esfahani, M.S., 2010. "Mathematical models for selection of optimal place and size of connections considering the time-value of money," European Journal of Operational Research, Elsevier, vol. 200(3), pages 764-773, February.
  • Handle: RePEc:eee:ejores:v:200:y:2010:i:3:p:764-773
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    References listed on IDEAS

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    1. Montreuil, Benoit & Ratliff, H. Donald, 1988. "Optimizing the location of input/output stations within facilities layout," Engineering Costs and Production Economics, Elsevier, vol. 14(3), pages 177-187, September.
    2. Simin Huang & Rajan Batta & Kathrin Klamroth & Rakesh Nagi, 2005. "The K-Connection Location Problem in a Plane," Annals of Operations Research, Springer, vol. 136(1), pages 193-209, April.
    3. Cohn, Amy & Davey, Melinda & Schkade, Lisa & Siegel, Amanda & Wong, Caris, 2008. "Network design and flow problems with cross-arc costs," European Journal of Operational Research, Elsevier, vol. 189(3), pages 890-901, September.
    4. Herrmann, J. W. & Ioannou, G. & Minis, I. & Proth, J. M., 1996. "A dual ascent approach to the fixed-charge capacitated network design problem," European Journal of Operational Research, Elsevier, vol. 95(3), pages 476-490, December.
    5. Horner, Mark W. & Groves, Sara, 2007. "Network flow-based strategies for identifying rail park-and-ride facility locations," Socio-Economic Planning Sciences, Elsevier, vol. 41(3), pages 255-268, September.
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