A profit-maximization location-capacity model for designing a service system with risk of service interruptions

Pooya Hoseinpour and Amir Ahmadi-Javid

Transportation Research Part E: Logistics and Transportation Review, 2016, vol. 96, issue C, 113-134

Abstract: This paper considers the design of an immobile service system in which each facility’s service process is subject to the risk of interruptions. The location-capacity decisions and allocations are simultaneously made to maximize the difference between the service provider’s profit and the sum of customers’ transportation and waiting costs. An efficient Lagrangian-based solution algorithm is developed, which solves large-sized instances with up to 50 service facilities and 500 customers in a few seconds. Several sensitivity analyses and managerial insights are presented. The model is also applied to a case study on a logistics network design problem in the zinc mining industry.

Keywords: Location-allocation problem; Service system design; Congested network; Queue systems with service interruptions; Mixed-integer nonlinear optimization; Lagrangian relaxation (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:96:y:2016:i:c:p:113-134

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DOI: 10.1016/j.tre.2016.08.004

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