Locating flow-intercepting facilities: New approaches and results

The problem of locating flow-intercepting facilities on a network with probabilistic customer flows and with facility set-up costs is studied in this paper. Two types of models are investigated, namely the double-counting model and the no-double-counting model (double-counting refers to multiple interceptions of the same customer). For each model, a nonlinear integer programming formulation is first obtained via the theory of Markov chains, and an equivalent linear integer program is then derived. A simple greedy heuristic is proposed for solving both models and a worst-case bound is established, which is shown to be tight under certain conditions.