Robust Facility Location: Hedging Against Failures
Hernandez, I., Ramirez-Marquez, J. E., Rainwater, C., Pohl, E., & Medal, H. (2014). Robust Facility Location: Hedging Against Failures. Reliability Engineering & System Safety. 123, 73-80.
While few companies would be willing to sacrifice day-to-day operations to hedge against disruptions, designing for robustness can yield solutions that perform well before and after failures have occurred. Through a multi-objective optimization approach this paper provides decision makers the option to trade-off total weighted distance before and after disruptions in the Facility Location Problem. Additionally, this approach allows decision makers to understand the impact on the opening of facilities on total distance and on system robustness (considering the system as the set of located facilities). This approach differs from previous studies in that hedging against failures is done without having to elicit facility failure probabilities concurrently without requiring the allocation of additional hardening/protections resources. The approach is applied to two datasets from the literature.