Hedging against service disruptions: an expected median location problem with site-dependent failure probabilities

The vector assignment p-median problem (VAPMP) (Weaver and Church in Transp Sci 19(1):58–74, 1985 ) was one of the first location-allocation models developed to handle split assignment of a demand to multiple facilities. The underlying construct of the VAPMP has been subsequently used in a number of reliable facility location and backup location models. Although in many applications the chance that a facility fails may vary substantially with locations, many existing models have assumed a uniform failure probability across all sites. As an improvement, this paper proposes a new model, the expected p-median problem as a generalization of existing approaches by explicitly considering site-dependent failure probabilities. Multi-level closest assignment constraints and two efficient integer linear programming (ILP) formulations are introduced. While prior research generally concludes that similar problems are not integer-friendly and cannot be solved by ILP software, computational results show that our model can be used to solve medium-sized location problems optimally using existing ILP software. Moreover, the new model can be used to formulate other reliable or expected location problems with consideration of site-dependent failure probabilities. Copyright Springer-Verlag 2013