A location-routing problem with disruption risk

This paper considers a location-routing problem in a supply-chain network with a set of producer–distributors that produce a single commodity and distribute it to a set of customers. The production capacity of each producer–distributor varies randomly due to a variety of possible disruptions, and the vehicles involved in the distribution system are disrupted randomly. The goal is to determine the location, allocation and routing decisions that minimize the annual cost of location, routing and disruption, under one of the moderate, cautious or pessimistic risk-measurement policies. Exact formulations and an efficient heuristic are presented for the problem.

► This paper studies a location-routing problem that incorporates disruption risk. ► Disruptions occurring in production and in distribution are considered. ► The problem is studied under different risk-measurement policies. ► Formulations and an efficient heuristic are developed to solve the problem. ► Results are provided to analyze the impact of incorporating disruption risk.