Disaggregated Benders decomposition and branch-and-cut for solving the budget-constrained dynamic uncapacitated facility location and network design problem

Abstract We present an approach for solving to optimality the budget-constrained Dynamic Uncapacitated Facility Location and Network Design problem (DUFLNDP). This is a problem where a network must be constructed or expanded and facilities placed in the network, subject to a budget, in order to satisfy a number of demands. With the demands satisfied, the objective is to minimise the running cost of the network and the cost of moving demands to facilities. The problem can be disaggregated over two different sets simultaneously, leading to many smaller models that can be solved more easily. Using disaggregated Benders decomposition embedded in a branch-and-cut framework, we solve many instances to optimality that have not previously been solved. We use an analytic procedure to generate Benders optimality cuts that are provably Pareto-optimal.