A facility reliability problem: Formulation, properties, and algorithm

Michael Lim*, Mark S. Daskin, Achal Bassamboo, Sunil Chopra

*Corresponding author for this work

Research output: Contribution to journalArticle

120 Scopus citations

Abstract

Having a robustly designed supply chain network is one of the most effective ways to hedge against network disruptions because contingency plans in the event of a disruption are often significantly limited. In this article, we study the facility reliability problem: how to design a reliable supply chain network in the presence of random facility disruptions with the option of hardening selected facilities.We consider a facility location problem incorporating two types of facilities, one that is unreliable and another that is reliable (which is not subject to disruption, but is more expensive).We formulate this as a mixed integer programming model and develop a Lagrangian Relaxation-based solution algorithm. We derive structural properties of the problem and show that for some values of the disruption probability, the problem reduces to the classical uncapacitated fixed charge location problem. In addition, we show that the proposed solution algorithm is not only capable of solving large-scale problems, but is also computationally effective.

Original languageEnglish (US)
Pages (from-to)58-70
Number of pages13
JournalNaval Research Logistics
Volume57
Issue number1
DOIs
StatePublished - Feb 1 2010

Keywords

  • Facility location
  • Network design
  • Supply chain disruption

ASJC Scopus subject areas

  • Modeling and Simulation
  • Ocean Engineering
  • Management Science and Operations Research

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