Exercise 1: The uncapacitated facility location problem (UFLP) is the problem of placing an

undetermined number of facilities to set of facility sites in order to minimize the sum of the
fixed setup costs and the variable costs of serving the market demand from these facilities.
A simple formulation of the problem can be done as follows:

min ci j xi j + fi yi
iI jJ

s.t:

iI

xi j = 1 for all j
iI

xi j yi 0 for all i I, j J
xi , yi {0, 1}
Where the assignment variables xi j , are defined as

(
1 if customer j0 s demand is serviced from facility i
xi j =
0 otherwise
And the location variables yi , are defined as

(
1 if a facility at site is open
yi =
0 otherwise
I denotes set of potential facility sites and J the set of customers, servicing customer j0 s
demand from facility i costs ci j and opening a facility costs fi .
The first set of constraints assign each customer to exactly one facility, in other words
all demands are fulfilled at a feasible solution. The second constraint set guarantee that
customer demand can be produced and shipped only from the locations where a facility is
established, i.e. when yi = 0 then the constraint ensures that xi j = 0.
Exercise 2: We have to find a way to show that the Lagrangian relaxation with respect to the
first set of constraints can be solved by inspection, that is that there is a closed solution for
that Lagrangian relaxation. Penalize the first set of constraints (by ) and put them into the
objective function, the lagrangian relaxation obtained by doing that is:

(
L( ) = min
x,y

ci j xi j + fiyi + j (1 xi j ) s.t: xi j yi 0, xi j {0, 1}, yi {0, 1}

iI jJ

iI

jJ

iI

We can distribute jJ j into the parenthesis and move the terms around a bit while keeping
equality, the following is more useful representation:

(
L( ) =

j + min
(ci j j )xi j + fiyi s.t: xi j yi 0, xi j {0, 1}, yi {0, 1}
x,y
jJ

iI jJ

iI

We have to find the minimizers x , y , that is an optimal solution to the minimization problem
in the above. Suppose that we know an optimal partial solution y , we then have find the
corresponding optimal solution x , which is the solution to the problem:

(
L( ) =

j +
jJ

iI

fi yi + min
x

(ci j j )xi j s.t:

xi j yi

0, xi j {0, 1}

iI jJ

Clearly we must have that the corresponding optimal x is given by:

(
y
xij = i
0

if 0 ci j j ,
otherwise

= 1{ j ci j 0}yi

where 1{} denotes the indicator function, from that we know how an optimal solution of
x looks like, provided we know an optimal solution of y. We can then resolve the original
problem formulation with this additional information (by substituting in the above), this yields
the following optimization problem:

(
L( ) =

j + min
(ci j j )1{ j ci j 0}yi + fiyi s.t: yi {0, 1}
y
jJ

iI jJ

iI

We need the optimal y above, and it can be given, as follows:

(ci j j )1{ j ci j 0}yi + fiyi s.t: yi {0, 1}

min
y

iI jJ

iI

(ci j j )1{ j ci j 0} + fi

= min
y

iI

= min
y

iI

( j ci j )1{ j ci j 0} fi

)
yi s.t: yi {0, 1}

jJ

= min
y

iI

yi s.t: yi {0, 1}

jJ

max{0, j ci j } fi
iI

max{0, j ci j } fi

(
y

yi s.t: yi {0, 1}

jJ

= max

yi s.t: yi {0, 1}

jJ

The steps are simple rearranging of the terms, also we can replace a minimize problem by
a maximization problem when a negative multiplier is present on all coefficients of the linear
and convex objective function, the inner parts are given by definition of an indicator function.
By now it is simple, in the above we must have that the corresponding optimal y is given by:

yi

(
1
=
0

if jJ max{0, j ci j } fi 0,
otherwise

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