Lower bounds for the two-stage uncapacitated facility location problem

In the two-stage uncapacitated facility location problem, a set of customers is served from a set of depots which receives the product from a set of plants. If a plant or depot serves a product, a fixed cost must be paid, and there are different transportation costs between plants and depots, and depots and customers. The objective is to locate plants and depots, given both sets of potential locations, such that each customer is served and the total cost is as minimal as possible. In this paper, we present a mixed integer formulation based on twice-indexed transportation variables, and perform an analysis of several Lagrangian relaxations which are obtained from it, trying to determine good lower bounds on its optimal value. Computational results are also presented which support the theoretical potential of one of the relaxations.