A Dual-Based Procedure for Stochastic Facility Location

• Published in: Operations research Vol. 40; no. 3; pp. 564 - 573
• Main Authors: Louveaux, Francois V, Peeters, D
• Format: Journal Article
• Language: English
• Published: Linthicum, MD INFORMS 01.05.1992; Operations Research Society of America; Institute for Operations Research and the Management Sciences
• Subjects: Algorithms; Applied sciences; Determinism; Exact sciences and technology; Facilities planning; facilities/equipment planning; Flows in networks. Combinatorial problems; Heuristics; Industrial plant locations; Integers; location; Mathematical models; Operational research and scientific management; Operational research. Management science; Operations research; Perceptual localization; Random variables; Stochastic models; stochastic: a dual-based algorithm; Studies; Transportation; Transportation costs; Stochastic model; Experimental result; Branch and bound method; Descent method; Heuristic method; Primal dual method; Duality; Facility; Location problem; Stochastic programming
• ISSN: 0030-364X; 1526-5463
• DOI: 10.1287/opre.40.3.564

In this paper, we study how the uncapacitated facility location problem is transformed into a two-stage stochastic program with recourse when uncertainty on demand, selling prices, production and transportation costs are introduced. We then present a dual-based procedure and indicate how the dual-descent and primal-dual adjustment procedures proposed by D. Erlenkotter (1978) in the static case can be made monotonically improving in the stochastic case. Results of computer experiments are reported.