Group for Research in Decision Analysis

The value of flexibility in robust location-transportation problem

Amir Ardestani Jaafari HEC Montréal, Canada

Facility location decisions play a critical role in transportation planning. In this talk, we study a capacitated fixed-charge location-transportation problem in which, while the location and capacity of each facility need to be determined immediately, the determination of final production and distribution of products can be delayed until actual orders are received. In contexts where little is known about future demand, robust optimization becomes a natural method to employ in order to identify meaningful decisions. Unfortunately, such problems are computationally intractable. To overcome this difficulty, we propose a set of conservative approximations to the problem that each exploits to a different extent the idea of reducing the flexibility of the delayed decisions. Each approximation will have the potential to reach a different level of compromise between efficiency of resolution and quality of the solution. We will also demonstrate that full flexibility is often unnecessary to reach nearly, or even exact, optimal robust locations and capacities for the facilities. We illustrate our findings with a numerical study where we evaluate the effect of the amount of uncertainty on the performance and structure of each approximate solution that can be obtained.

This seminar is only open to students and members of GERAD. We would highly appreciate if you could confirm your attendance. Pizza and non alcoholic beverages will be available; you can also bring your own lunch.