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Dual Market Facility Network Design under Bounded Rationality

Department of Industrial & Systems Engineering, Indian Institute of Technology, Kharagpur 721302, India
Durham University Business School, Durham University, Durham DH1 3LB, UK
O9 Solutions, Bangalore 560037, India
Author to whom correspondence should be addressed.
Algorithms 2018, 11(4), 54;
Received: 18 February 2018 / Revised: 12 April 2018 / Accepted: 16 April 2018 / Published: 20 April 2018
(This article belongs to the Special Issue Algorithms for Scheduling Problems)
PDF [3782 KB, uploaded 3 May 2018]


A number of markets, geographically separated, with different demand characteristics for different products that share a common component, are analyzed. This common component can either be manufactured locally in each of the markets or transported between the markets to fulfill the demand. However, final assemblies are localized to the respective markets. The decision making challenge is whether to manufacture the common component centrally or locally. To formulate the underlying setting, a newsvendor modeling based approach is considered. The developed model is solved using Frank-Wolfe linearization technique along with Benders’ decomposition method. Further, the propensity of decision makers in each market to make suboptimal decisions leading to bounded rationality is considered. The results obtained for both the cases are compared. View Full-Text
Keywords: facility network design; newsvendor model; bounded rationality; non-linear programming; decomposition method; linearization technique facility network design; newsvendor model; bounded rationality; non-linear programming; decomposition method; linearization technique

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Mogale, D.G.; Lahoti, G.; Jha, S.B.; Shukla, M.; Kamath, N.; Tiwari, M.K. Dual Market Facility Network Design under Bounded Rationality. Algorithms 2018, 11, 54.

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