Mixed Integer Programming Model for Facility Location Problems: Case Study for Consolidation Centers

Nowadays, enterprises create and develope several strategies for reaching maximum logistic quality level desired. One of this strategies is consolidation cargo. According to Çetinkaya (2003), there are two approaches: pure policies and integral policies. Pure consolidation politics satisfies customer needs without considering implications from other organization areas. Integral consolidation politics coordinate company’s decisions between all areas involved (procurement, production, sales, distribution, etc.) Boyaci and Gallego (Int J Prod Econ 77:95–111, 2002). This study presented a Facility Location Problem for a study case of a Mexican factory that imports raw material from European vendors in LCL (Less than a Container Load) shipments scheme. The premise states that a LCL is more expensive than a FCL (Full Container Load). Also, total lead time is higher. For minimizing the total transportation costs it is suggested to implement consolidation centers to gather the load from all suppliers into FCL shipments for the factory. Transit time port-to-port and cost for maintaining inventory play an important role in the decision. The problem is formulated as a mixed integer programming (MIP) model and the proposed scenarios for solving this study case are analyzed in order to propose final recommendations.