Exact robust solutions for the combined facility location and network design problem in hazardous materials transportation

Abstract

We consider a leader-follower game in the form of a bi-level optimization problem that simultaneously optimizes facility locations and network design in hazardous materials transportation. In the upper level, the leader intends to reduce the facility setup cost and the hazmat exposure risk, by choosing facility locations and road segments to close for hazmat transportation. When making such decisions, the leader anticipates the response of the followers who want to minimize the transportation costs. Considering uncertainty in the hazmat exposure and the hazmat transport demand, we consider a robust optimization approach with multiplicative uncertain parameters and polyhedral uncertainty sets. The resulting problem has a min-max problem in the upper level and a shortest-path problem in the lower level. We devise an exact algorithm that combines a cutting plane algorithm with Benders decomposition

Keywords:

• Bi-level optimization
• facility location
• network design
• cutting plane
• Benders decomposition
• hazardous materials

Additional information

Funding

This research was partially supported by NSF grant CMMI-1558359.

Notes on contributors

Xufei Liu

Xufei Liu received the B.S. and M.S. degrees in industrial engineering from Jilin University, Changchun, China, in 2014 and 2017, respectively. She is currently pursuing her Ph.D. degree in the Department of Industrial and Management Systems Engineering at University of South Florida, Tampa, Florida, USA. Her current research interest is hazardous materials transportation.

Changhyun Kwon

Changhyun Kwon is an associate professor in Industrial and Management Systems Engineering at the University of South Florida. His research interests include transportation systems analysis and service operations problems. He received a Ph.D. degree in industrial engineering in 2008 and an M.S. degree in industrial engineering and operations research in 2005, both from the Pennsylvania State University. He also received a B.S. degree in mechanical engineering from KAIST in 2000. He received an NSF CAREER award in 2014. Before he joined the University of South Florida, he had been with the University at Buffalo, where he received the UB Exceptional Scholar: Young Investigator Award in 2015.