Facility location under uncertainty：a review.pdf

IIE Transactions (2006) 38, 537–554 Copyright C “IIE” ISSN: 0740-817X print / 1545-8830 online DOI: 10.1080/07408170500216480 Facility location under uncertainty: a review LAWRENCE V. SNYDER Department of Industrial and Systems Engineering, Lehigh University, Bethlehem, PA 18015, USA E-mail: lvs2@ Received July 2004 and accepted May 2005 Plants, distribution centers, and other facilities generally function for years or decades, during which time the environment in which they operate may change substantially. Costs, demands, travel times, and other inputs to classical facility location models may be highly uncertain. This has made the development of models for facility location under uncertainty a high priority for researchers in both the logistics and stochastic/robust optimization communities. Indeed, a large number of the approaches that have been proposed for optimization under uncertainty have been applied to facility location problems. This paper reviews the literature on stochastic and robust facility location models. Our intent is to illustrate both the rich variety of approaches for optimization under uncertainty that have appeared in the literature and their application to facility location problems. In a few instances for which examples in facility location are not available, we provide examples from the more general logistics literature. 1. Introduction phase during which capital investments are made, followed by a tactical phase, with uncertainty being resolved between Facility location decisions are costly and difficult to reverse, the two. and their impact spans a long time horizon. During the time In the interest of brevity, we have opted not to discuss the when design decisions are in effect, any of the parameters large body of literature on facility loca