Article ID: | iaor20073872 |
Country: | Singapore |
Volume: | 24 |
Issue: | 2 |
Start Page Number: | 161 |
End Page Number: | 179 |
Publication Date: | Apr 2007 |
Journal: | Asia-Pacific Journal of Operational Research |
Authors: | Wallace Stein W., Crainic Teodor Gabriel, Lium Arnt-Gunnar |
Deterministic models, even if used repeatedly, will not capture the essence of planning in an uncertain world. Flexibility and robustness can only be properly valued in models that use stochastics explicitly, such as stochastic optimization models. However, it may also be very important to capture how the random phenomena are related to one another. In this article we show how the solution to a stochastic service network design model depends heavily on the correlation structure among the random demands. The major goal of this paper is to discuss why this happens, and to provide insights into the effects of correlations on solution structures. We illustrate by an example.