An integrated model and a decomposition-based approach for concurrent layout and material handling system design

This paper presents an integer programming formulation that integrates decisions concerning the layout of the resource groups on the shop floor with the design of the material handling system. The model reflects critical practical concerns, including the capacity of the material flow network and of the handling transporters, as well as the tradeoff between fixed (construction and acquisition) and variable (operational) costs. For realistic industrial cases, the size of the problem prevents the solution using explicit or implicit enumeration methods. Instead, the global model is decomposed into standard optimization problems: quadratic assignment, fixed charge capacitated network design, and non-depot distance-constrained vehicle routing. An integrated solution method, guided by a simulated annealing scheme, solves the global shop design problem. The algorithm takes advantage of the proposed decomposition and converges to a final design which is feasible with respect to all problem constraints. The method is applied to redesign the facility of a large manufacturer of radar antennas. The resulting shop configuration exhibits substantially decreased material handling effort, and requires significantly smaller investment costs compared to the existing facility.