Robust solutions for network design under transportation cost and demand uncertainty

Robust solutions for network design under transportation cost and demand uncertainty

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Article ID: iaor2009759
Country: United Kingdom
Volume: 59
Issue: 5
Start Page Number: 652
End Page Number: 662
Publication Date: May 2008
Journal: Journal of the Operational Research Society
Authors: , ,
Keywords: networks, optimization, programming: transportation
Abstract:

In many applications, the network design problem (NDP) faces significant uncertainty in transportation costs and demand, as it can be difficult to estimate current (and future values) of these quantities. In this paper, we present a robust optimization-based formulation for the NDP under transportation cost and demand uncertainty. We show that solving an approximation to this robust formulation of the NDP can be done efficiently for a network with single origin and destination per commodity and general uncertainty in transportation costs and demand that are independent of each other. For a network with path constraints, we propose an efficient column generation procedure to solve the linear programming relaxation.

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