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Robust strategies for facility location under uncertainty
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Gulpinar, Nalan, Pachamanova, Dessislava A. and Çanakoğlu, Ethem (2013) Robust strategies for facility location under uncertainty. European Journal of Operational Research, Vol.225 (No.1). pp. 21-35. doi:10.1016/j.ejor.2012.08.004 ISSN 0377-2217.
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Official URL: http://dx.doi.org/10.1016/j.ejor.2012.08.004
Abstract
This paper considers a stochastic facility location problem in which multiple capacitated facilities serve customers with a single product, and a stockout probabilistic requirement is stated as a chance constraint. Customer demand is assumed to be uncertain and to follow either a normal or an ambiguous distribution. We study robust approximations to the problem in order to incorporate information about the random demand distribution in the best possible, computationally tractable way. We also discuss how a decision maker's risk preferences can be incorporated in the problem through robust optimization. Finally, we present numerical experiments that illustrate the performance of the different robust formulations. Robust optimization strategies for facility location appear to have better worst-case performance than nonrobust strategies. They also outperform nonrobust strategies in terms of realized average total cost when the actual demand distributions have higher expected values than the expected values used as input to the optimization models. © 2012 Elsevier B.V. All rights reserved.
| Item Type: | Journal Article | ||||
|---|---|---|---|---|---|
| Divisions: | Faculty of Social Sciences > Warwick Business School | ||||
| Journal or Publication Title: | European Journal of Operational Research | ||||
| Publisher: | Elsevier Science BV | ||||
| ISSN: | 0377-2217 | ||||
| Official Date: | 16 February 2013 | ||||
| Dates: |
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| Volume: | Vol.225 | ||||
| Number: | No.1 | ||||
| Page Range: | pp. 21-35 | ||||
| DOI: | 10.1016/j.ejor.2012.08.004 | ||||
| Status: | Peer Reviewed | ||||
| Publication Status: | Published | ||||
| Access rights to Published version: | Restricted or Subscription Access |
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