A Note on `A Comparison of Heuristic Methods for Service

Facility Locations'
J.-M. Thizy
Faculty of Administration,
University of Ottawa
May 1989
Abstract

In a recent article, A. Ardalan presents a heuristic for service facility location. This heuristic
is the Add heuristic of Kuehn and Hamburger, originally applied to warehouse location. Extensive results are known about the theoretical and practical performance of this heuristic, which
applies to service facility location only when a global utility criterion can be used.

Several textbooks in Production and Operations Management [3, 8] cite A. Ardalan's heuristic
for service facility location [2]. In a recent article of IJOPM [1], A. Ardalan presents the heuristic
and compares it with other methods. This heuristic is the Add heuristic of Kuehn and Hamburger
[9] which is referenced in Ardalan's article [1]. Kuehn and Hamburger tested their heuristic on
real-world warehouse location problems. Owing to their air for a simple and powerful method, the
heuristic has received extremely wide attention. Extensive results are known about the theoretical
and practical performance of this heuristic.
Not only has it become virtually impossible to list all extensions and variants of the method,
but even referencing surveys and compendia would take several pages! Interested readers can trace
these studies from the most recent survey [5].
Cornuejols, Fisher and Nemhauser, [6] have dubbed the method Greedy Heuristic and have
essentially proved that although it is guaranteed to yield a value within 37% of the optimal solution,
it generally provides much better accuracy. Many optimal algorithms have been implemented, and
Thizy, Van Wassenhove and Khumawala [10] have shown that for problems similar to those studied
by Ardalan, Erlenkotter's optimal algorithm DUALOC [7] is as fast as a simple implementation of
the Greedy Heuristic. Conn and Cornuejols' algorithm seems to be the most ecient for large-scale
problems [4].
The Greedy Heuristic is not specic to service facility location. Initially applied to warehouse
location, it is designed to minimize global disutility, i.e. Ardalan's total travel cost. But aggregating
individual utilities may not model users' behavior properly, because users seek to maximize their
own utility independently. In this case, service facility location uses original decision models and
the Greedy Heuristic is inappropriate.
The Greedy Heuristic can be used whether users travel to facilities or services are delivered to
users. Note that the direction of travel does not distinguish service from manufacturing. With
hazard protection and ambulatory care, service is delivered to users, just as corporate products. On
the other hand, customers may have to travel to producers' (e.g. transport equipment such as trucks
and aircraft, farming produce collection, crude oil procurement).
A distinguishing feature of the Greedy Heuristic is that it is designed to serve each user, whatever the service cost. This requirement is typically common to service administration and production/distribution management. Only at the strategic level would a corporation decide to discontinue
service to a location if it was not protable.
 Supported by NSERC Grant OGP 0042197

References

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Journal of Operations and Production Management, 8(2):52{58, 1988.
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[5] Cornuejols, G., G.L. Nemhauser and L.A. Wolsey. The Uncapacitated Facility Location Problem.
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