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Stochastic programming approach to re-designing a warehouse network under uncertainty

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  • Kiya, Farhad
  • Davoudpour, Hamid

Abstract

The warehouse network re-design problem includes integrating or eliminating existing warehouses and establishing new sites. In this paper, we incorporate variability in product demand and operational costs with a two-stage stochastic modeling approach. We use the Sample Average Approximation (SAA) approach together with Benders decomposition to provide a solution method. Our results indicate not only that the stochastic solution is an improvement over the deterministic solution but also that the solutions’ differences grow with increasing uncertainty. The stochastic solutions show more robustness than the deterministic solutions. The computational results show that a change in the type of probability distribution of the stochastic parameters does not significantly affect the value of the stochastic solutions.

Suggested Citation

  • Kiya, Farhad & Davoudpour, Hamid, 2012. "Stochastic programming approach to re-designing a warehouse network under uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(5), pages 919-936.
    • Handle: RePEc:eee:transe:v:48:y:2012:i:5:p:919-936
    DOI: 10.1016/j.tre.2012.04.005
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    Cited by:

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    3. Paweł Hanczar & Zahra Azadehranjbar, 2022. "A Bi-Objective Sustainable Supply Chain Redesign: What Effect Does Energy Availability Have on Redesign?," Energies, MDPI, vol. 15(10), pages 1-13, May.
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    5. Diglio, Antonio & Peiró, Juanjo & Piccolo, Carmela & Saldanha-da-Gama, Francisco, 2023. "Approximation schemes for districting problems with probabilistic constraints," European Journal of Operational Research, Elsevier, vol. 307(1), pages 233-248.

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