Stochastic uncapacitated hub location

Stochastic uncapacitated hub location

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Article ID: iaor20114561
Volume: 212
Issue: 3
Start Page Number: 518
End Page Number: 528
Publication Date: Aug 2011
Journal: European Journal of Operational Research
Authors: , ,
Keywords: simulation: applications, location
Abstract:

We study stochastic uncapacitated hub location problems in which uncertainty is associated to demands and transportation costs. We show that the stochastic problems with uncertain demands or dependent transportation costs are equivalent to their associated deterministic expected value problem (EVP), in which random variables are replaced by their expectations. In the case of uncertain independent transportation costs, the corresponding stochastic problem is not equivalent to its EVP and specific solution methods need to be developed. We describe a Monte‐Carlo simulation‐based algorithm that integrates a sample average approximation scheme with a Benders decomposition algorithm to solve problems having stochastic independent transportation costs. Numerical results on a set of instances with up to 50 nodes are reported.

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