Reliable facility location design under disruptions☆
Section snippets
Motivation
Distribution networks are referred to the entire chain of intermediaries and transportation logistics for distribution of goods and services from the suppliers to the consumers. Modern distribution networks are complex engineered systems due to their size, span, the nature of customer assignment, and the network flow. At the same time, more and more enterprises have been embracing the philosophy of lean manufacturing with an ever increasing reliance on consolidated suppliers, outsourcing, slim
Status of current literature
Most of the existing literature on design of distribution networks takes its roots in the classical P-median [33] and the uncapacitated fixed-charge location problems [21]. Both these problems seek to choose facility locations and assignments of customers to minimize the total transportation (and construction) cost. In both original models, all facilities are assumed to be perfectly reliable. However, as evidenced from the above examples, facilities can experience disruptions which can cause
The reliable P-median problem (RPMP)
The model extends the reliable P-median facility location problem introduced by Snyder [31] by considering heterogeneous facility failure probabilities and facility fortification. The model seeks to minimize the total expected transportation cost by optimally locating P facilities, allocating a finite fortification budget, and assigning the customers. We first formulate this problem as a nonlinear integer programming model and then develop a Lagrangian relaxation-based solution algorithm.
The reliable uncapacitated fixed-charge facility location model
The RUFL model can increase the network reliability of RPMP by relaxing the restriction on the number of open facilities. Our RUFL model extends the reliable fixed-charge facility location problem introduced by Snyder [31] by considering heterogeneous facility failure probabilities and facility fortification. The model seeks to minimize the sum of the total facility construction cost and the expected transportation cost by optimally selecting facility locations, allocating a finite
Experimental design
We tested the performance of both the RPMP and RUFL solution algorithms on four datasets [14], [15] containing 30, 49, 100, and 150 nodes, respectively. The last three datasets were adapted from [31] whereas the 30-node dataset was generated by arbitrarily selecting 30 nodes from the 49-node dataset. Demands hi were taken from [31]. The Euclidean distance between nodes i and j was used as the transportation cost dij. We let the sets I and J be equal. The failure probabilities qj were randomly
Conclusions
In this paper, we presented two related models for design of distribution networks exposed to risk of disruptions: a reliable P-median problem and a reliable uncapacitated fixed-charge location problem. Both models considered heterogenous facility failure probabilities and one layer of supplier backup. The facility failure probabilities were assumed to be independent and location specific. We considered facility fortification whereby the cost of fortification was assumed to be location
References (34)
- et al.
A continuum approximation approach to reliable facility location design under correlated probabilistic disruptions
Transportation Research Part B
(2010) - et al.
Design of reliable logistics networks with facility disruptions
Transportation Research Part BMethodological
(2011) - et al.
An exact solution approach for the interdiction median problem with fortification
European Journal of Operational Research
(2008) - Carpenter C. Copper advances as Chile Earthquake cuts power, halts mines. BusinessWeek; February 28,...
- et al.
Building the resilient supply chain
International Journal of Logistics Management
(2004) - et al.
Protection critical assetsthe r-interdiction median problem with fortification
Geographical Analysis
(2007) - et al.
Identifying critical infrastructurethe median and covering facility interdiction problems
Annals of the Association of American Geographers
(2004) - CNN.com. Gulf oil production still on hold 〈http://edition.cnn.com/2005/BUSINESS/09/28/oil.production/〉;...
- et al.
Reliable facility location design under the risk of disruptions
Operations Research
(2010) - Cundari S, Czerwinski JJ, Kitfield J, Mason D, Sands C. The U.S.–Canada strategic partnership in the war on terrorism...