Locating Facilities in the Presence of Disruptions and Incomplete Information*


  • *

    We thank the associate editor and the anonymous referees for many helpful suggestions that improved the article. This research was supported by the NSERC grants of the first two authors.

†Corresponding author.


In this article, we analyze a location model where facilities may be subject to disruptions. Customers do not have advance information about whether a given facility is operational or not, and thus may have to visit several facilities before finding an operational one. The objective is to locate a set of facilities to minimize the total expected cost of customer travel. We decompose the total cost into travel, reliability, and information components. This decomposition allows us to put a value on the advance information about the states of facilities and compare it to the reliability and travel cost components, which allows a decision maker to evaluate which part of the system would benefit the most from improvements. The structure of optimal solutions is analyzed, with two interesting effects identified: facility centralization and co-location; both effects appear to be stronger than in the complete information case, where the status of each facility is known in advance.