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Locating Facilities in the Presence of Disruptions and Incomplete Information *
Author(s) -
Berman Oded,
Krass Dmitry,
Menezes Mozart B. C.
Publication year - 2009
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.2009.00253.x
Subject(s) - facility location problem , reliability (semiconductor) , computer science , operations research , decision maker , set (abstract data type) , information system , value of information , complete information , total cost , decomposition , operations management , business , economics , mathematics , microeconomics , ecology , power (physics) , physics , accounting , quantum mechanics , artificial intelligence , biology , programming language , engineering , electrical engineering
In this article, we analyze a location model where facilities may be subject to disruptions. Customers do not have advance information about whether a given facility is operational or not, and thus may have to visit several facilities before finding an operational one. The objective is to locate a set of facilities to minimize the total expected cost of customer travel. We decompose the total cost into travel, reliability, and information components. This decomposition allows us to put a value on the advance information about the states of facilities and compare it to the reliability and travel cost components, which allows a decision maker to evaluate which part of the system would benefit the most from improvements. The structure of optimal solutions is analyzed, with two interesting effects identified: facility centralization and co‐location; both effects appear to be stronger than in the complete information case, where the status of each facility is known in advance.