A robust solution for optimizing facility location and network design with diverse link capacities

Abstract

In this paper, the authors proffer a novel mathematical model for the simultaneous optimization of facility location and network design in the presence of uncertainty, with the aim of minimizing operational and transportation costs. The proposed model constitutes a departure from conventional methods in its consideration of probable events in the real world and the incorporation of uncertainty assumptions into the mathematical framework. An algorithm based on simulated annealing is then advanced for the solution of the problem, and the performance of the algorithm is evaluated through comparison with exact methods for problems of modest size, as well as with a basic simulated annealing algorithm for larger problems. The results of these comparisons demonstrate the superiority of the proposed meta-heuristic algorithm. Finally, the robust approach is compared with four other approaches in the presence of uncertainty, with a thorough analysis of the results obtained from each of the methods conducted in a suite of sample problems.