A risk management model for the plant location problem

Abstract

This paper proposes a risk management model for the facility location problems in a fuzzy environment. We investigate the capacitated plant location problem in continuous space as a risk model. Three risk types are considered in the proposed model: customer risk, financial risk and supply risk. The risks are caused because of unsatisfied demands, budget constraint and capacity constraint, respectively. The introduced model is an extension of the continuous plant location model by adding capacity constraint. A facility belongs to a zone when it is located in a predetermined radius from the centre of the zone. Because of uncertain budget and demand, the model is considered in a fuzzy environment. Finally, a risk management model is proposed with the presentation of a degree of satisfaction concept for each risk as an objective function. Also, a numerical example with sensitivity analysis is presented to illustrate the proposed model.

Keywords:

• capacitated continuous plant location problem (CCPLP)
• risk management
• financial risk
• customer risk
• supply risk
• satisfaction degree
• fuzzy set theory