Facility location problems

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Author: Aaron Litoff
Stewards: Dajun Yue and Fengqi You

MILP [1]

The facility location problem deals with selecting the location of a facility (often from a list of integer possibilities) to best meet demand. The goal is to most efficiently serve the needs of the c

Finding the location to build a factory that minimizes total weighted distances from suppliers and customers where weights are representative of the difficulty of transporting materials.

constraints demanded while doing so at the lowest cost. Finding a factory location which minimizes total weighted distances from suppliers and customers where weights represent difficulty of transportation or amounts of material



The Fermat-Weber problem was one of the first facility location problems every proposed, and was done so as early as the 17th century. This "geometric median of three points" can be thought of as a version of the facility location problem where the assumption is made that transportation costs per distance are the same for all destinations. It was put forth by the French mathematician Pierre de Fermat to the Italian physicist Evangelista Torricelli as follows:

"Given three points in a plane, find a fourth point such that the sum of its distances to the three given points is as small as possible."

In 1909 Alfred Weber used a three point version to model possible industrial locations in order to minimize transportation costs with the weights being This is the simplest continous facility location model.

Alt text
The Fermat Point, or Torricelli Point, is the solution that minimizes distances from A, B, and C (the three corners of the black triangle).

A modern day engineering interpretation could be as follows:
"Find the best location for a refining plant between three cities in such a way that the sum of the connections between the plant and the cities in minimal."

Description and Formulation

Binary decision variables

Examples and Applications

A Real World Example

Suppose you are a manager at a company that builds Warehouse needs to be built in a central location so that the transportation costs are minimized

Applications in physics, solution to Fermat-Weber problem allowing for "repulsion" or negative distances.

Applications in Industry



[1] Dorrie, H. (1965) 100 great problems of elementary mathematics: their history and solution. New York, NY: Dover Publications.

[2] Drezner, Z & Hamacher. H. W. (2004). Facility location: applications and theory. New York, NY: Springer.

Last, F. M. (Year Published) Book. City, State: Publisher.