A reliable facility location design model with site-dependent disruption in the imperfect information context

This paper proposes a reliable facility location design model under imperfect information with site-dependent disruptions; i.e., each facility is subject to a unique disruption probability that varies across the space. In the imperfect information contexts, customers adopt a realistic “trial-and-error” strategy to visit facilities; i.e., they visit a number of pre-assigned facilities sequentially until they arrive at the first operational facility or give up looking for the service. This proposed model aims to balance initial facility investment and expected long-term operational cost by finding the optimal facility locations. A nonlinear integer programming model is proposed to describe this problem. We apply a linearization technique to reduce the difficulty of solving the proposed model. A number of problem instances are studied to illustrate the performance of the proposed model. The results indicate that our proposed model can reveal a number of interesting insights into the facility location design with site-dependent disruptions, including the benefit of backup facilities and system robustness against variation of the loss-of-service penalty.