Facility Location with the Disruption Risk in the Supply Chain Network Design

In a classical facility location problem (FLP), parameters are regarded as deterministic; however, stochastic parameters (e.g., demand variation and transportation costs) have been addressed in the FLP recently, and less attention is paid to facility failure and breakdown. When one or more distribution center incurs failure, the needs of customers are met by other distribution centers leading to an increase in transportation costs. Besides, establishment of more distribution centers to reduce transportation costs imposes additional costs. As a result, the aim of this paper is to make a balance between transportation costs and the costs of establishing distribution centers. The presented model then is solved by a simulated annealing (SA) algorithm. Finally, numerical examples and experimental results are presented.

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