The Reliable Facility Location Problem: Formulations, Heuristics, and Approximation Algorithms

Authors:
Zuo-Jun Max Shen;Roger Lezhou Zhan;Jiawei Zhang
Affiliations:
Department of Industrial Engineering and Operations Research, University of California, Berkeley, California 94720;Operations Research Group, CitationAir, Greenwich, Connecticut 06831;Department of Information, Operations, and Management Sciences, Stern School of Business, New York University, New York 10012
Venue:
INFORMS Journal on Computing
Year:
2011

Citing 15
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Abstract

We study a reliable facility location problem wherein some facilities are subject to failure from time to time. If a facility fails, customers originally assigned to it have to be reassigned to other (operational) facilities. We formulate this problem as a two-stage stochastic program and then as a nonlinear integer program. Several heuristics that can produce near-optimal solutions are proposed for this NP-hard problem. For the special case where the probability that a facility fails is a constant (independent of the facility), we provide an approximation algorithm with a worst-case bound of 4. The effectiveness of our heuristics is tested by extensive computational studies, which also lead to some managerial insights.