Two-stage robust facility location problem with multiplicative uncertainties and disruptions

Abstract

In this paper, we integrate two independent multiplicative uncertainties (uncertain demand and cost) and facility disruptions together, introduce budget uncertainty set to capture uncertain parameters. Based on the underlying deterministic model, we propose a two-stage robust facility location model, incorporating facility disruptions in recourse stage, which is an nonlinear problem resulted by two multiplicative uncertain parameters. Then, using the recent advances in robust optimization, we reformulate the proposed model as a tractable mixed integer linear programming. Finally, it is applied to a practical study for emergency supply network in Northwest Sichuan, and some managerial insights are drawn.