THE FACILITY LOCATION PROBLEM: MODEL, ALGORITHM, AND APPLICATION TO COMPRESSOR ALLOCATION

Unlike other problems found in the oil industry, the allocation of compressors to gas-lifted oil wells lacks formal models and algorithms capable of delivering globally optimal assignments. To this end, this paper casts the compressor allocation problem as a facility location problem. Owing to the special structure of the target problem, an efficient (polynomial time) algorithm is conceived by applying the framework of dynamic programming. An example illustrates the inner-workings of the algorithm. Connections between the polyhedron of feasible solutions and integer-programming theory are established.