RePEc: Research Papers in Economics · 2007 · 208 citations · 1 references
ManagementIndustrial EngineeringOperations ManagementFacility LocationFacility ManagementOptimizationDistribution Center LocationLocation StrategyLocation-allocation AnalysisLocation-allocation ModelsNetwork ReliabilityP-median ProblemCentralizationClassical P-median ProblemFacility Location DecisionsFailure ProbabilityFailure Probability AnalysisFailure Probability EstimationNetwork P-median ModelsOptimal Location Modeling
The study examines how facility disruptions influence customer service by analyzing a facility location model where customers must seek service from operating facilities. The authors extend the classical network p‑median problem to incorporate facility failure probabilities, develop exact and heuristic solution methods, and conduct extensive numerical experiments to analyze the model’s structural and algorithmic properties. They find that as facility failure probability increases, optimal locations become more centralized or co‑located, indicating a strong dependence on failure risk.
In this paper we analyze a facility location model where facilities may be subject to disruptions, causing customers to seek service from the operating facilities. We generalize the classical p-Median problem on a network to explicitly include the failure probabilities, and analyze structural and algorithmic aspects of the resulting model. The optimal location patterns are seen to be strongly dependent on the probability of facility failure - with facilities becoming more centralized, or even co-located, as the failure probability grows. Several exact and heuristic solution approaches are developed. Extensive numerical computations are performed
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