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The α‐reliable mean‐excess regret model for stochastic facility location modeling

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  • Gang Chen
  • Mark S. Daskin
  • Zuo‐Jun Max Shen
  • Stanislav Uryasev

Abstract

In this paper, we study a strategic facility location problem under uncertainty. The uncertainty associated with future events is modeled by defining alternative future scenarios with probabilities. We present a new model called the α‐reliable mean‐excess model that minimizes the expected regret with respect to an endogenously selected subset of worst‐case scenarios whose collective probability of occurrence is no more than 1 − α. Our mean‐excess risk measure is coherent and computationally efficient. Computational experiments also show that the α‐reliable mean‐excess criterion matches the α‐reliable minimax criterion closely. © 2006 Wiley Periodicals, Inc. Naval Research Logistics 2006

Suggested Citation

  • Gang Chen & Mark S. Daskin & Zuo‐Jun Max Shen & Stanislav Uryasev, 2006. "The α‐reliable mean‐excess regret model for stochastic facility location modeling," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(7), pages 617-626, October.
    • Handle: RePEc:wly:navres:v:53:y:2006:i:7:p:617-626
    DOI: 10.1002/nav.20180
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    References listed on IDEAS

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    Cited by:

    1. Sabet, Ehsan & Yazdani, Baback & Kian, Ramez & Galanakis, Kostas, 2020. "A strategic and global manufacturing capacity management optimisation model: A Scenario-based multi-stage stochastic programming approach," Omega, Elsevier, vol. 93(C).
    2. Mengshi Lu & Zuo‐Jun Max Shen, 2021. "A Review of Robust Operations Management under Model Uncertainty," Production and Operations Management, Production and Operations Management Society, vol. 30(6), pages 1927-1943, June.
    3. N Görmez & M Köksalan & F S Salman, 2011. "Locating disaster response facilities in Istanbul," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(7), pages 1239-1252, July.
    4. Taymaz, S. & Iyigun, C. & Bayindir, Z.P. & Dellaert, N.P., 2020. "A healthcare facility location problem for a multi-disease, multi-service environment under risk aversion," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    5. Zhong, Shaopeng & Cheng, Rong & Jiang, Yu & Wang, Zhong & Larsen, Allan & Nielsen, Otto Anker, 2020. "Risk-averse optimization of disaster relief facility location and vehicle routing under stochastic demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).

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