Multiperiod Capacity Expansion in Globally Dispersed Regions

Abstract

Multiperiod capacitated location (MCL) models specify where and when capacity expansions should be made, and how large they should be. The MCL model developed in this paper incorporates a shift from manufacturing for overseas markets to manufacturing in overseas markets. While MCL models generally have not provided lower bounds on the optimal solution, the methodology of this paper provides both upper and lower bounds. Computational results are given for problems involving up to 200 locations/destinations and 10‐year planning horizons. Near‐optimal solutions are provided in reasonable computing times with average convergence less than 2%. Representative variations in cost between regions are simulated in the test problems, and the managerial implications of alternative diversification strategies are also assessed.

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