α-reliable p-minimax regret: A new model for strategic facility location modeling

α-reliable p-minimax regret: A new model for strategic facility location modeling

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Article ID: iaor19991622
Country: United Kingdom
Volume: 5
Issue: 4
Start Page Number: 227
End Page Number: 246
Publication Date: Dec 1997
Journal: Location Science
Authors: , ,
Keywords: -centre problem
Abstract:

Facility location problems are inherently strategic in nature. One approach to dealing with the uncertainty associated with future events is to define alternative future scenarios. Planners then attempt to optimize: (1) the expected performance over all future scenarios, (2) the expected regret, or (3) the worst-case regret. Both the expected performance and the expected regret approaches assume that the planner can associate probabilities with the scenarios, while optimizing the worst-case regret obviates the need for these probabilities. Worst-case regret planning can, however, be driven by a scenario with a very small likelihood of occurrence. We present a new model that optimizes the worst-case performance over a set of scenarios that is endogenously selected from a broader exogenously specified set. The selection is based on the scenario probabilities. The new model is formulated and computational results on a moderately sized problem are presented. Model extensions are discussed.

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