Journal
COMPUTERS & OPERATIONS RESEARCH
Volume 40, Issue 4, Pages 901-909Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.cor.2012.11.012
Keywords
Facility location; Distribution networks; Design; Reliable; Disruptions; Fortification
Categories
Funding
- National Science Foundation [CMMI 0621030]
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Distribution networks have been facing an increased exposure to risk of unpredicted disruptions causing significant economic forfeitures. At the same time, the existing literature features very few studies which examine the impact of facility fortification for improving network reliability. In this paper, we present two related models for design of reliable distribution networks: a reliable P-median problem (RPMP) and a reliable uncapacitated fixed-charge location problem (RUFL). Both models consider heterogenous facility failure probabilities, one layer of supplier backup, and facility fortification within a finite budget. Both RPMP and RUFL are formulated as nonlinear integer programming models and proved to be NP-hard. We develop Lagrangian relaxation-based (LR) solution algorithms and demonstrate their computational efficiency. We compare the effectiveness of the LR-based solutions to that of the solutions obtained by a myopic policy which aims to fortify most reliable facilities regardless of the demand topology. Finally, we discuss an alternative way to assess the effectiveness of the design solutions by using the rate of return on fortification investment. (C) 2012 Elsevier Ltd. All rights reserved.
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