Article ID: | iaor20042197 |
Country: | United Kingdom |
Volume: | 39 |
Issue: | 3 |
Start Page Number: | 209 |
End Page Number: | 227 |
Publication Date: | May 2003 |
Journal: | Transportation Research. Part E, Logistics and Transportation Review |
Authors: | Turnquist Mark A., List George F., Nozick Linda K., Kjeldgaard Edwin A., Jones Dean A., Wood Bryan, Lawton Craig R. |
Keywords: | optimization |
We create a formulation and a solution procedure for fleet sizing under uncertainty in future demands and operating conditions. The formulation focuses on robust optimization, using a partial moment measure of risk. This risk measure is incorporated into the expected recourse function of a two-stage stochastic programming formulation, and stochastic decomposition is used as a solution procedure. A numerical example illustrates the importance of including uncertainty in the fleet sizing problem formulation, and the nature of the fundamental tradeoff between acquiring more vehicles and accepting the risk of potentially high costs if insufficient resources are available.