The location-routing problem is an integrated model, which combines the location as a strategic problem and the routing as an operational problem. However, what is the fixed cost of this model? In what applications we can integrate the location with the routing?
Fixed cost is the cost incurred while opening a facility at a particular location and there is another fixed cost per vehicle i.e. Driver wages, maintenance costs etc.
Dear Venkata,
Your idea about the fixed cost is completely right. However, I think the fixed cost can be defined in another form such as relocation cost. I want to know the different definition of fixed cost in different applications.
In deterministic location-routing problems there are many interpretations of fixed costs including but not limited to:
- open a depot, - use a path (sequence of arcs due payed highways), - rent a collection of vehicles, - extend the capacity of a vehicle, - combine perishable and non-perishable goods within the same vehicle, reload the goods depending on a pickup-delivery path, - balance a vehicle (vessel), - recharge a vehicle (by gas, electricity, etc.), - have a breake, - change the drivers, cross a border line (customer control), etc.
Dear Hossein Karimi: Thank you for your attention : Fixed cost has a different meaning according to a study branch as in the following: Economics, fixed costs, indirect costs or overheads are business expenses that are not dependent on the level of goods or services produced by the business. In management accounting, fixed costs are defined as expenses that do not change as a function of the activity of a business, In marketing, it is necessary to know how costs divide between variable and fixed.
Often, "fixed cost" is opposed to "proportional costs", in the sense that it is a cost that you pay whatever volume of commodities or traffic you are going to serve with that facility (or up to a capacity, in capacitated cases). On the contrary, "proportional costs" are proportional to the usage.
Fixed cost are those costs which are independent of the total load to be served, e.g. facility opening costs, facility insurance costs, etc. There are lots of applications for the LRP such as: humanitarian logistics, post-disaster logistics, last-mile distribution, etc.
In my opinion, fixed costs for the mentioned problem have to be independent of the load or trajectory, and linked with the capacity or the operation of the warehouses (for example).
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