Two-Commodity Facility Location Problem: Exact And Approximate Solution Methods

An exact and three approximate solution methods for the two-commodity location problem (TCLP) are presented and tested in this paper. The exact solution integrates mixed integer programming and dynamic programming methods.First, a mixed integer programming approach is used to generate a minimum number of solutions with respect to each commodity. Second, commodities are treated as stages of a dynamic environment and dynamic programming is employed to find the optimal assignment of commodities to facilities. This integrated solution methodology is an effective technique. It provides many near-optimal solutions that may be used for post-optimality analysis. An illustrative example is provided.