A heuristic approach on the facility layout problem based on game theory

Facility layout problems are related to the location of all facilities in a plant. Numerous research works related to facility layout have been published. The applicability of these various existing models may be limited by the fact that they all ignore competitive reactions to one's actions. In addition to external competitors, some internal problems of system such as material handling system design affect layout designs. For considering these effects, some researchers have investigated multi-objective approaches that in most cases lead to the optimisation of a weighted sum of score functions. The poor practicability of such an approach is due to the difficulty of normalising these functions and quantifying the weights. To the extent that competitors do react to a firm's actions and also the facility layout problem considers several conflicting objectives by distinct decision makers in the firm, the existing models may be oversimplifications of reality. In this paper, we modelled such a facility layout problem with conflicting objectives under a duopoly Bertrand competition as a game and solved it with a proposed simulated annealing meta-heuristic. Results obtained from solving some numerical examples confirm the effectiveness of the proposed model for the layout design.