Sloan School of Management Working Paper 4387-02 October 2002 A MULTI-EXCHANGE HEURISTIC FOR THE SINGLE SOURCE CAPACITATED FACILITY LOCATION PROBLEM

We present a very large-scale neighborhood (VLSN) search algorithm for the capacitated facility location problem with single-source constraints. The neighborhood structures are induced by customer multi-exchanges and by facility moves. We consider both traditional single-customer multi-exchanges, detected on a suitably definedcustomer improvement graph, and more innovative multicustomer multi-exchanges, detected on afacility improvement graph dynamically built through the use of a greedy scheme. Computational results for some benchmark instances are reported that demonstrate the effectiveness of the approach for solving large-scale problems. A further test on real data involving an Italian factory is also presented.

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