Multistage stochastic programming with a random number of stages: Applications in hurricane disaster relief logistics planning

We consider a logistics planning problem of prepositioning relief commodities in preparation for an impending hurricane landfall. We model the problem as a multi-period network flow problem where the objective is to minimize the total expected logistics cost of operating the network to meet the demand for relief commodities. We assume that the hurricane’s attributes evolve over time according to a Markov chain model, and the demand quantity at each demand point is calculated based on the hurricane’s attributes (intensity and location) at the terminal stage, which corresponds to the hurricane’s landfall. We introduce a fully adaptive multi-stage stochastic programming (MSP) model that allows the decision-maker to adapt their logistics decisions over time according to the evolution of the hurricane’s attributes. In addition, we develop a novel extension of the standard MSP model to address the challenge of having a random number of stages in the planning horizon due to the uncertain landfall time of the hurricane. We benchmark the performance of the adaptive decision policy given by the MSP models with alternative decision policies, including a static policy, a rolling-horizon policy, a wait-and-see policy, and a decision-tree-based policy, all based on two-stage stochastic programming models. Our numerical results and sensitivity analyses provide key insights into the value of MSP in the hurricane disaster relief logistics planning problem.