Enhancing Facility Reliability with Backup Options and Budget Constraint
DOI:
https://doi.org/10.7166/37-1-3266Abstract
This study considers facility failures in supply chain networks in which facilities must be located at candidate sites to serve customers. To enhance reliability, we incorporate backup options and a limited fortification budget. Customers assigned to fortified facilities do not require backup, while those assigned to unfortified ones do. The problem is formulated as a linear integer model and solved using Lagrangian relaxation. The relaxed model yields a variant of the binary knapsack problem, addressed through a novel solution method. The proposed approach achieves an average optimality gap of 0.1% with a computational time of 20 seconds.
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