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A commonly occurring problem in distribution system design is the optimal location of intermediate distribution facilities between plants and customers. A multi-commodity capacitated single-period version of this problem is formulated as a mixed integer linear program. A solution technique based on Benders Decomposition is developed, implemented, and successfully applied to a real problem for a major food firm with 17 commodity classes, 14 plants, 45 possible distribution center sites, and 121 customer zones. An essentially optimal solution was found and proven with a surprisingly small number of Benders cuts. Some discussion is given concerning why this problem class appears to be so amenable to solution by Benders' method, and also concerning what we feel to be the proper professional use of the present computational technique.
Geoffrion et al. (Tue,) studied this question.