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Optimization models generally aim for efficiency by maximizing total benefit or minimizing cost. Yet a trade-off between fairness and efficiency is an important element of many practical decisions. We propose a principled and practical method for balancing these two criteria in an optimization model. Following a critical assessment of existing schemes, we define a set of social welfare functions (SWFs) that combine Rawlsian leximax fairness and utilitarianism and overcome some of the weaknesses of previous approaches. In particular, we regulate the equity/efficiency trade-off with a single parameter that has a meaningful interpretation in practical contexts. We formulate the SWFs using mixed integer constraints and sequentially maximize them subject to constraints that define the problem at hand. After providing practical step-by-step instructions for implementation, we demonstrate the method on problems of realistic size involving healthcare resource allocation and disaster preparation. The solution times are modest, ranging from a fraction of a second to 18 seconds for a given value of the trade-off parameter.

We apply logic-based Benders decomposition (LBBD) to two-stage stochastic planning and scheduling problems in which the second-stage is a scheduling task. We solve the master problem with mixed integer/linear programming and the subproblem with constraint programming. As Benders cuts, we use simple nogood cuts as well as analytical logic-based cuts we develop for this application. We find that LBBD is computationally superior to the integer L-shaped method, with a branch-and-check variant of LBBD faster by several orders of magnitude, allowing significantly larger instances to be solved. This is due primarily to computational overhead incurred by the integer L-shaped method while generating classical Benders cuts from a continuous relaxation of an integer programming subproblem. To our knowledge, this is the first application of LBBD to two-stage stochastic optimization with a scheduling second-stage problem, and the first comparison of LBBD with the integer \mbox{L-shaped} method. The results suggest that LBBD could be a promising approach to other stochastic and robust optimization problems with integer or combinatorial recourse.

Logic-based Benders decomposition (LBBD) is a substantial generalization of classical Benders decomposition that, in principle, allows the subproblem to be any optimization problem rather than specifically a linear or nonlinear programming problem. It is amenable to a wide variety large-scale problems that decouple or otherwise simplify when certain decision variables are fixed. This chapter presents the basic theory of LBBD and explains how classical Benders decomposition is a special case. It also describes branch and check, a variant of LBBD that solves the master problem only once. It illustrates in detail how Benders cuts and subproblem relaxations can be developed for some planning and scheduling problems. It then describes the role of LBBD in three large-scale case studies. The chapter concludes with an extensive survey of the LBBD literature, organized by problem domain, to allow the reader to explore how Benders cuts have been developed for a wide range of applications.