A tri-level optimization model for facility location-protection problem considering design and redesign decisions under disruption

Abstract

PurposeFortification-interdiction models provide system designers with a broader perspective to identify and protect vital components. Based on this concept, the authors examine how disruptions impact critical supply systems and propose the most effective protection strategies based on three levels of decision-makers. This paper aims to investigate location and fortification decisions at the first level. Moreover, a redesign problem is presented in the third level to locate backup facilities and reallocate undisrupted facilities following the realization of the disruptive agent decisions at the second level.Design/methodology/approachTo address this problem, the authors develop a tri-level planner-attacker-defender optimization model. The model minimizes investment and demand satisfaction costs and alleviates maximal post-disruption costs. While decisions are decentralized at different levels, the authors develop an integrated solution algorithm to solve the model using the column-and-constraint generation (CCG) method.FindingsThe model and the solution approach are tested on a real supply system consisting of several hospitals and demand areas in a region in Iran. Results indicate that incorporating redesign decisions at the third level reduces maximum disruption costs.Originality/valueThe paper makes the following contributions: presenting a novel tri-level optimization model to formulate facility location and interdiction problems simultaneously, considering corrective measures at the third level to reconfigure the system after interdiction, creating a resilient supply system that can fulfill all demands after disruptions, employing a nested CCG method to solve the model.