Optimum Decision of Capacity and Location of Plants

Abstract

A multi-period planning model for decision of capacity and location of chemical plants was devised wherein the total discounted profit was maximized, taking account of plant construction cost and those of production, transportation, etc. Nonlinear costs, upper limit of plant construction capacity, and plant life were considered in the model.
The problem was formulated as a large-scale optimization problem containing a nonlinear function and 0-1 variables. The procedure of successive approximation by 0-1 mixed integer programming problem was proposed, and a partitioning procedure based on Benders' decomposition was developed in order to calculate it.
The situation of the planning model and the effectiveness of the calculation procedure are made clear through numerical examples.