A review of hierarchical facility location models
Computers and Operations Research
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We conducted a study for Efes Beverage Group to evaluate various sites as potential locations for new malt plants. We performed an economic analysis that showed the inferiority of some alternatives. To evaluate the remaining alternatives, we developed a mixed-integer-programming model that considers both the location of new malt plants and the distribution of barley and malt. It considers the long-run effects of the decisions and minimizes the present value of total costs. Sakarya, Izmir, and Ankara turned out to be the best locations for new malt plants. Efes is currently using the model for distribution decisions. Based on our results and new developments that occurred since then, top managers are currently debating where and when to locate the new malt plants.