Facility Location Optimization under disruptions and in an Uncertain Environment

Project Description

Facility location optimization is an optimization problem in operations research, particularly in network design decisions in the supply chain. In it most standard form (the Uncapacited Facility Location Problem), the problem can be stated as follows: Given facilities with known capacities (possibly infinite), candidate sites and customer demands, the problem consists in locating facilities on sites and assigning customers in such a way to satisfy all demands without exceeding capacities and at minimal, fixed and variable costs. It is assumed that the decision problem occurs in some deterministic and reliable conditions. The customer demands and different costs are predictable, and facilities are so reliable that customers always get the service. Over the life of a logistic network, some services, transportation links, demands and costs, may experience disruptions or fluctuations. Thus, a network design that looks very good, taking into account deterministic evaluation, may in fact be quite poor if the situation were to change. Our first purpose is to propose a “new” mathematical model for optimal location subject to disruptions on services. We first analyze the case of unlimited capacity and move on to limited capacity. As a corollary, we examine the problem of optimally sizing safety capacity to satisfy additional demands. Finally, failure aspects will be considered jointly with uncertainty on demands and costs. The general aim is to propose, models, solution methods and algorithms for each problem that may be used by managers in designing logistic networks, taking into account the uncertainties both on facilities availability and demands and costs. The theoretical and algorithmic elements that will be developed may be the background of a network design decisionaid software for network design with uncertainties. A prototype of such a type of application will be developed to demonstrate the quality of our approach and to test various algorithms.

Participating Organizations