Premium
A facility reliability problem: Formulation, properties, and algorithm
Author(s) -
Lim Michael,
Daskin Mark S.,
Bassamboo Achal,
Chopra Sunil
Publication year - 2010
Publication title -
naval research logistics (nrl)
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.665
H-Index - 68
eISSN - 1520-6750
pISSN - 0894-069X
DOI - 10.1002/nav.20385
Subject(s) - facility location problem , lagrangian relaxation , computer science , mathematical optimization , reliability (semiconductor) , integer programming , supply chain , supply chain network , contingency , fixed charge , flow network , supply chain management , algorithm , mathematics , power (physics) , physics , chemistry , quantum mechanics , political science , molecular physics , law , linguistics , philosophy
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. © 2009 Wiley Periodicals, Inc. Naval Research Logistics, 2010