Deniz Aksen

Locating collection centers for incentive-dependent returns under a pick-up policy with capacitated vehicles

We address the problem of locating collection centers of a company that aims to collect used products from product holders. The remaining value in the used products that can be captured by recovery operations is the companys motivation for the collection operation. We assume that a pick-up strategy is in place according to which vehicles with limited capacity are dispatched from the collection centers to the locations of product holders to transport the returns. Each product holder has an inherent willingness to return, and makes the decision on the basis of the financial incentive offered by the company. The incentive depends on the condition of the returned item referred to as return type. We formulate a mixed-integer nonlinear facility location-allocation model to find both the optimal locations of a predetermined number of collection centers and the optimal incentive values for different return types. Since the problem is , we propose a heuristic method to solve medium and large-size instances. The main loop of the method is based on a tabu search method performed in the space of collection center locations. For each location set prescribed by tabu search, Nelder-Mead simplex search is called to obtain the best incentives and the corresponding net profit. We experiment with different quality profiles when there are two and three return types, and observe the effect of the uniform incentive policy (UIP) in which the same incentive is offered to product holders regardless of the quality of their returns. We conclude that the UIP is inferior to the quality-dependent incentive policy resulting in a higher profit loss when the proportion of lowest quality returns is relatively high.

The single-item lot-sizing problem with immediate lost sales

Abstract We introduce a profit maximization version of the well-known Wagner–Whitin model for the deterministic uncapacitated single-item lot-sizing problem with lost sales. Demand cannot be backlogged, but it does not have to be satisfied, either. Costs and selling prices are assumed to be time-variant, differentiating our model from previous models with lost sales. Production quantities and levels of lost sales in different periods represent a twofold decision problem. We first transform the total profit function into a special total cost function. We then prove several properties of an optimal solution. A forward recursive dynamic programming algorithm is developed to solve the problem optimally in O( T 2 ) time, where T denotes the number of periods in the problem horizon. The proposed algorithm can solve problems of sizes up to 400 periods in less than a second on a 500 MHz Pentium ® III processor.

A location-routing problem for the conversion to the "click-and-mortar" retailing: The static case

The static conversion from brick-and-mortar retailing to the hybrid click-and-mortar business model is studied from the perspective of distribution logistics. Retailers run warehouses and brick-and-mortar stores to meet the demand of their walk-in customers. When they decide to operate on the Web as an e-tailer, also click-and-mortar stores are needed which can serve both walk-in and online customers. While the distance between home and the nearest open store is used as a proxy measure for walk-in customers, a quality of service (QoS) guarantee for online customers is timely delivery of their orders. We describe and solve a static location-routing based problem for companies that embrace the clicks-and-bricks strategy in their retail operations. An augmented Lagrangian relaxation method embedded in a subgradient optimization procedure generates lower bounds, whereas a heuristic method finds feasible solutions. The performance of the Lagrangian-based solution method is tested on a number of randomly generated test problems.

A bilevel fixed charge location model for facilities under imminent attack

We investigate a bilevel fixed charge facility location problem for a system planner (the defender) who has to provide public service to customers. The defender cannot dictate customer-facility assignments since the customers pick their facility of choice according to its proximity. Thus, each facility must have sufficient capacity installed to accommodate all customers for whom it is the closest one. Facilities can be opened either in the protected or unprotected mode. Protection immunizes against an attacker who is capable of destroying at most r unprotected facilities in the worst-case scenario. Partial protection or interdiction is not possible. The defender selects facility sites from m candidate locations which have different costs. The attacker is assumed to know the unprotected facilities with certainty. He makes his interdiction plan so as to maximize the total post-attack cost incurred by the defender. If a facility has been interdicted, its customers are reallocated to the closest available facilities making capacity expansion necessary. The problem is formulated as a static Stackelberg game between the defender (leader) and the attacker (follower). Two solution methods are proposed. The first is a tabu search heuristic where a hash function calculates and records the hash values of all visited solutions for the purpose of avoiding cycling. The second is a sequential method in which the location and protection decisions are separated. Both methods are tested on 60 randomly generated instances in which m ranges from 10 to 30, and r varies between 1 and 3. The solutions are further validated by means of an exhaustive search algorithm. Test results show that the defenders facility opening plan is sensitive to the protection and distance costs. Highlights? We investigate a bilevel fixed charge facility location problem for a system planner (the defender) who has to provide public service to customers by opening facilities at candidate locations. ? Facilities can be opened either in the protected or unprotected mode. Protection immunizes against an attacker who is capable of destroying at most r unprotected facilities in the worst-case scenario. Partial protection or interdiction is not possible. ? The problem is formulated as a static Stackelberg game between the defender (leader) and the attacker (follower). ? Two solution methods are proposed. The first is a tabu search heuristic where a hash function calculates and records the hash values of all visited solutions for the purpose of avoiding cycling. The second is a sequential method in which the location and protection decisions are separated. ? The produced solutions are validated by means of an exhaustive search algorithm.

A bilevel partial interdiction problem with capacitated facilities and demand outsourcing

In this paper, partial facility interdiction decisions are integrated for the first time into a median type network interdiction problem with capacitated facilities and outsourcing option. The problem is modeled as a static Stackelberg game between an intelligent attacker and a defender. The attackers (leaders) objective is to cause the maximum (worst-case) disruption in an existing service network subject to an interdiction budget. On the other hand, the defender (follower) is responsible for satisfying the demand of all customers while minimizing the total demand-weighted transportation and outsourcing cost in the wake of the worst-case attack. She should consider the capacity reduction at the interdicted facilities where the number of interdictions cannot be known a priori, but depends on the attackers budget allocation. We propose two different methods to solve this bilevel programming problem. The first one is a progressive grid search which is not viable on large sized instances. The second one is a multi-start simplex search heuristic developed to overcome the exponential time complexity of the first method. We also use an exhaustive search method to solve all combinations of full interdiction to assess the advantage of partial interdiction for the attacker. The test results suggest that under the partial interdiction approach the attacker can achieve a better utilization of his limited resources.

An adaptive large neighborhood search algorithm for a selective and periodic inventory routing problem

We study a selective and periodic inventory routing problem (SPIRP) and develop an Adaptive Large Neighborhood Search (ALNS) algorithm for its solution. The problem concerns a biodiesel production facility collecting used vegetable oil from sources, such as restaurants, catering companies and hotels that produce waste vegetable oil in considerable amounts. The facility reuses the collected waste oil as raw material to produce biodiesel. It has to meet certain raw material requirements either from daily collection, or from its inventory, or by purchasing virgin oil. SPIRP involves decisions about which of the present source nodes to include in the collection program, and which periodic (weekly) routing schedule to repeat over an infinite planning horizon. The objective is to minimize the total collection, inventory and purchasing costs while meeting the raw material requirements and operational constraints. A single-commodity flow-based mixed integer linear programming (MILP) model was proposed for this problem in an earlier study. The model was solved with 25 source nodes on a 7-day cyclic planning horizon. In order to tackle larger instances, we develop an ALNS algorithm that is based on a rich neighborhood structure with 11 distinct moves tailored to this problem. We demonstrate the performance of the ALNS, and compare it with the MILP model on test instances containing up to 100 source nodes.

A Bilevel p-median model for the planning and protection of critical facilities

The bilevel p-median problem for the planning and protection of critical facilities involves a static Stackelberg game between a system planner (defender) and a potential attacker. The system planner determines firstly where to open p critical service facilities, and secondly which of them to protect with a limited protection budget. Following this twofold action, the attacker decides which facilities to interdict simultaneously, where the maximum number of interdictions is fixed. Partial protection or interdiction of a facility is not possible. Both the defender’s and the attacker’s actions have deterministic outcome; i.e., once protected, a facility becomes completely immune to interdiction, and an attack on an unprotected facility destroys it beyond repair. Moreover, the attacker has perfect information about the location and protection status of facilities; hence he would never attack a protected facility. We formulate a bilevel integer program (BIP) for this problem, in which the defender takes on the leader’s role and the attacker acts as the follower. We propose and compare three different methods to solve the BIP. The first method is an optimal exhaustive search algorithm with exponential time complexity. The second one is a two-phase tabu search heuristic developed to overcome the first method’s impracticality on large-sized problem instances. Finally, the third one is a sequential solution method in which the defender’s location and protection decisions are separated. The efficiency of these three methods is extensively tested on 75 randomly generated instances each with two budget levels. The results show that protection budget plays a significant role in maintaining the service accessibility of critical facilities in the worst-case interdiction scenario.

Selective and periodic inventory routing problem for waste vegetable oil collection

We consider a biodiesel production company that collects waste vegetable oil from source points that generate waste in large amounts. The company uses the collected waste as raw material for biodiesel production. The manager of this company needs to decide which of the present source points to include in the collection program, which of them to visit on each day, which periodic routing schedule to repeat over an infinite horizon and how many vehicles to operate such that the total collection, inventory and purchasing costs are minimized while the production requirements and operational constraints are met. For this selective and periodic inventory routing problem, we propose two different formulations, compare them and apply the better performing one on a real-world problem with 36 scenarios. We generate lower bounds using a partial linear relaxation model, and observe that the solutions obtained through our model are within 3.28% of optimality on the average. Several insights regarding the customer selection, routing and purchasing decisions are acquired with sensitivity analysis.

Solving the Multi-Depot Location-Routing Problem with Lagrangian Relaxation

Multi-depot Location-Routing Problem (MDLRP) is about finding the optimal number and locations of depots while allocating customers to depots and determining vehicle routes to visit all customers. In this study we propose a nested Lagrangian relaxation-based method for the discrete uncapacitated MDLRP. An outer Lagrangian relaxation embedded in subgradient optimization decomposes the parent problem into two subproblems. The first subproblem is a facility location-like problem. It is solved to optimaliy with Cplex 9.0. The second one resembles a capacitated and degree constrained minimum spanning forest problem, which is tackled with an augmented Lagrangian relaxation. The solution of the first subproblem reveals a depot location plan. As soon as a new distinct location plan is found in the course of the subgradient iterations, a tabu search algorithm is triggered to solve the multi-depot vehicle routing problem associated with that plan, and a feasible solution to the parent problem is obtained. Its objective value is checked against the current upper bound on the parent problem’s true optimal objective value. The performance of the proposed method has been observed on a number of test problems, and the results have been tabulated.

Loss of customer goodwill in the uncapacitated lot-sizing problem

Loss of customer goodwill in uncapacitated single level lot-sizing is studied with a mixed integer programming model extending the well-known Wagner-Whitin (WW) model. The objective is to maximize profit from production and sales of a single good over a finite planning horizon. Demand, costs, and prices vary with time. Unsatisfied demand cannot be backordered. It leads to the immediate loss of profit from sales. Previous models augment the total cost objective by this lost profit. The difference of the proposed model is that unsatisfied demand in a given period causes the demand in the next period to shrink due to the loss of customer goodwill. A neighborhood search and restoration heuristic is developed that tries to adjust the optimal lot sizes of the original no-goodwill-loss model to the situation with goodwill loss. Its performance is compared with the WW solution, and with the commercial solver CPLEX 8.1 on 360 test problems of various period lengths.