## Fraunhofer (ITWM)

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- Heuristics (2)
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- Stochastic programming approaches for risk aware supply chain network design problems (2010)
- In this paper, a multi-period supply chain network design problem is addressed. Several aspects of practical relevance are considered such as those related with the financial decisions that must be accounted for by a company managing a supply chain. The decisions to be made comprise the location of the facilities, the flow of commodities and the investments to make in alternative activities to those directly related with the supply chain design. Uncertainty is assumed for demand and interest rates, which is described by a set of scenarios. Therefore, for the entire planning horizon, a tree of scenarios is built. A target is set for the return on investment and the risk of falling below it is measured and accounted for. The service level is also measured and included in the objective function. The problem is formulated as a multi-stage stochastic mixed-integer linear programming problem. The goal is to maximize the total financial benefit. An alternative formulation which is based upon the paths in the scenario tree is also proposed. A methodology for measuring the value of the stochastic solution in this problem is discussed. Computational tests using randomly generated data are presented showing that the stochastic approach is worth considering in these type of problems.

- A generic geometric approach to territory design and districting (2009)
- Territory design and districting may be viewed as the problem of grouping small geographic areas into larger geographic clusters called territories in such a way that the latter are acceptable according to relevant planning criteria. The availability of GIS on computers and the growing interest in Geo-Marketing leads to an increasing importance of this area. Despite the wide range of applications for territory design problems, when taking a closer look at the models proposed in the literature, a lot of similarities can be noticed. Indeed, the models are many times very similar and can often be, more or less directly, carried over to other applications. Therefore, our aim is to provide a generic application-independent model and present efficient solution techniques. We introduce a basic model that covers aspects common to most applications. Moreover, we present a method for solving the general model which is based on ideas from the field of computational geometry. Theoretical as well as computational results underlining the efficiency of the new approach will be given. Finally, we show how to extend the model and solution algorithm to make it applicable for a broader range of applications and how to integrate the presented techniques into a GIS.

- The capacitated single-allocation hub location problem revisited: A note on a classical formulation (2009)
- Denote by G = (N;A) a complete graph where N is the set of nodes and A is the set of edges. Assume that a °ow wij should be sent from each node i to each node j (i; j 2 N). One possibility is to send these °ows directly between the corresponding pairs of nodes. However, in practice this is often neither e±cient nor costly attractive because it would imply that a link was built between each pair of nodes. An alternative is to select some nodes to become hubs and use them as consolidation and redistribution points that altogether process more e±ciently the flow in the network. Accordingly, hubs are nodes in the graph that receive tra±c (mail, phone calls, passengers, etc) from di®erent origins (nodes) and redirect this tra±c directly to the destination nodes (when a link exists) or else to other hubs. The concentration of tra±c in the hubs and its shipment to other hubs lead to a natural decrease in the overall cost due to economies of scale.

- An LP-rounding heuristic to solve a multi-period facility relocation problem (2009)
- A general multi-period network redesign problem arising in the context of strategic supply chain planning (SCP) is studied. Several aspects of practical relevance in SCP are captured namely, multiple facility layers with different types of facilities, flows between facilities in the same layer, direct shipments to customers, and facility relocation. An efficient two-phase heuristic approach is proposed for obtaining feasible solutions to the problem, which is initially modeled as a large-scale mixed-integer linear program. In the first stage of the heuristic, a linear programming rounding strategy is applied to second initial values for the binary location variables in the model. The second phase of the heuristic uses local search to correct the initial solution when feasibility is not reached or to improve the solution when its quality does not meet given criteria. The results of an extensive computational study performed on randomly generated instances are reported.

- Single-allocation hub location problems with capacity choices (2009)
- In this paper, an extension to the classical capacitated single-allocation hub location problem is studied in which the size of the hubs is part of the decision making process. For each potential hub a set of capacities is assumed to be available among which one can be chosen. Several formulations are proposed for the problem, which are compared in terms of the bound provided by the linear programming relaxation. Di®erent sets of inequalities are proposed to enhance the models. Several preprocessing tests are also presented with the goal of reducing the size of the models for each particular instance. The results of the computational experiments performed using the proposed models are reported.

- Planning for home health care services (2009)
- Home Health Care (HHC) services are becoming increasingly important in Europe’s aging societies. Elderly people have varying degrees of need for assistance and medical treatment. It is advantageous to allow them to live in their own homes as long as possible, since a long-term stay in a nursing home can be much more costly for the social insurance system than a treatment at home providing assistance to the required level. Therefore, HHC services are a cost-effective and flexible instrument in the social system. In Germany, organizations providing HHC services are generally either larger charities with countrywide operations or small private companies offering services only in a city or a rural area. While the former have a hierarchical organizational structure and a large number of employees, the latter typically only have some ten to twenty nurses under contract. The relationship to the patients (“customers”) is often long-term and can last for several years. Therefore acquiring and keeping satisfied customers is crucial for HHC service providers and intensive competition among them is observed.

- The ordered gradual covering location problem on a network (2008)
- In this paper we develop a network location model that combines the characteristics of ordered median and gradual cover models resulting in the Ordered Gradual Covering Location Problem (OGCLP). The Gradual Cover Location Problem (GCLP) was specifically designed to extend the basic cover objective to capture sensitivity with respect to absolute travel distance. Ordered Median Location problems are a generalization of most of the classical locations problems like p-median or p-center problems. They can be modeled by using so-called ordered median functions. These functions multiply a weight to the cost of fulfilling the demand of a customer which depends on the position of that cost relative to the costs of fulfilling the demand of the other customers. We derive Finite Dominating Sets (FDS) for the one facility case of the OGCLP. Moreover, we present efficient algorithms for determining the FDS and also discuss the conditional case where a certain number of facilities are already assumed to exist and one new facility is to be added. For the multi-facility case we are able to identify a finite set of potential facility locations a priori, which essentially converts the network location model into its discrete counterpart. For the multi-facility discrete OGCLP we discuss several Integer Programming formulations and give computational results.

- Multi-period public transport design: A novel model and solution approaches (2008)
- In this paper, we are going to propose the first mathematical model for Multi- Period Hub Location Problems (MPHLP). We apply this mixed integer program- ming model on public transport planning and call it Multi-Period Hub Location Problem for Public Transport (MPHLPPT). In fact, HLPPT model proposed earlier by the authors is extended to include more facts and features of the real-life application. In order to solve instances of this problem where existing standard solvers fail, a solution approach based on a greedy neighborhood search is developed. The computational results substantiate the efficiency of our solution approach to solve instances of MPHLPPT.

- Network design decisions in supply chain planning (2008)
- Structuring global supply chain networks is a complex decision-making process. The typical inputs to such a process consist of a set of customer zones to serve, a set of products to be manufactured and distributed, demand projections for the different customer zones, and information about future conditions, costs (e.g. for production and transportation) and resources (e.g. capacities, available raw materials). Given the above inputs, companies have to decide where to locate new service facilities (e.g. plants, warehouses), how to allocate procurement and production activities to the variousmanufacturing facilities, and how to manage the transportation of products through the supply chain network in order to satisfy customer demands. We propose a mathematical modelling framework capturing many practical aspects of network design problems simultaneously. For problems of reasonable size we report on computational experience with standard mathematical programming software. The discussion is extended with other decisions required by many real-life applications in strategic supply chain planning. In particular, the multi-period nature of some decisions is addressed by a more comprehensivemodel, which is solved by a specially tailored heuristic approach. The numerical results suggest that the solution procedure can identify high quality solutions within reasonable computational time.

- A novel territory design model arising in the implementation of the WEEE-Directive (2008)
- The problem discussed in this paper is motivated by the new recycling directiveWEEE of the EC. The core of this law is, that each company which sells electrical or electronic equipment in a European country has the obligation to recollect and recycle an amount of returned items which is proportional to its market share. To assign collection stations to companies, in Germany for one product type a territory design approach is planned. However, in contrast to classical territory design, the territories should be geographically as dispersed as possible to avoid that a company, resp. its logistics provider responsible for the recollection, gains a monopoly in some region. First, we identify an appropriate measure for the dispersion of a territory. Afterwards, we present a first mathematical programming model for this new problem as well as a solution method based on the GRASP methodology. Extensive computational results illustrate the suitability of the model and assess the effectiveness of the heuristic.