Facilities Installation Planner (FIP)

FIP is optimization modeling based decision tool that helps the management of a large or medium firm to undertake long-term strategic planning for design or expansion or consolidation of a network of facilities in a supply chain. FIP is also useful for governmental and policy making agencies to plan for long-term capacity investments in an infrastructure or industrial sector of an economy.

Outputs/Decision variables

FIP’s core model is a large-scale, multi-period mixed integer linear program that can simultaneously calculate the following plans while optimizing on a user-specified objective

  • Location, capacity and technology for opening new production facilities (plants)
  • Location and capacity of opening new warehouses and depots
  • Expansion of existing plants and warehouses
  • Closing of existing plants and warehouses
  • Aggregate allocation of suppliers-plants-warehouses-markets

FIP finds time-phased optimal expansion plans as indicated above subject to meeting the estimated trajectory of demand/sales of each product in each market and several resource constraints at various stages in the supply chain.


User has following choices for objective on which the model performs optimization

  • Maximize contribution
  • Minimize total delivered cost
  • Minimize average lead time
  • Minimize average utilization of production
  • Multiple objectives with user-specified priority ranking


FIP tool is modular. This allows it to be implemented for any of the following networks:

  • Inbound logistics, Production, Outbound logistics
  • Procurement and Inbound logistics
  • Production
  • Outbound logistics and distribution
  • Production and outbound logistics
  • Inbound and Outbound logisticsMinimize average lead time

Therefore, FIP can be applied to practically every industry.

Questions FIP can help answer

  • What is the optimal location and capacity expansion plan for production and stocking facilities in a supply chain in order to meet anticipated growth targets in various markets?
  • What is the optimal plan for consolidating the existing network of warehouses in response to the new tax regime (VAT)? Which warehouses must be closed down and in which order? Where and how much capacity should be the new warehouses be located?
  • What is the optimal plan for expansion or consolidation of the supplier base?
  • Sensitivity analysis: What is the impact of changes in the following parameters on the firm’s optimal facilities expansion/consolidation plan and financial indicators:
    • New candidate location for plant or warehouse
    • Closure of an existing plant or warehouse
    • Transport (fuel) cost
    • Capital cost of a new facility or technology
    • Forecasted sales volume and prices
  • What is the financial impact of a particular facilities expansion/consolidation plan?
    • Total enterprise-wide cost
    • Capital investment cost
    • Logistics cost
    • Processing cost