1. Two-stage distributionally robust optimization for disaster relief logistics under option contract and demand ambiguity.
- Author
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Wang, Duo, Yang, Kai, Yang, Lixing, and Dong, Jianjun
- Subjects
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AMBIGUITY , *DISASTER relief , *ROBUST optimization , *DISASTER victims , *DISTRIBUTION (Probability theory) , *NATURAL disasters , *STOCHASTIC programming - Abstract
Disaster relief logistics (DRL) provides adequate relief supplies to victims of natural disasters (e.g., earthquakes and volcanic eruptions). This study explicitly considers supplier selection and inventory pre-positioning corresponding to static preparedness decisions, and post-disaster procurement and delivery associated with dynamic response decisions in actual DRL operations. To tackle issues triggered by shortage and surplus of multi-class relief resources, a flexible option contract is adopted to purchase relief items from suppliers. To measure the risk of demand ambiguity, a worst-case mean-quantile-deviation criterion is introduced to reflect the decision-maker's risk-averse attitude. To handle the ambiguity in the probability distribution of demand, a novel two-stage distributionally robust optimization (DRO) model is developed for the addressed DRL problem. The proposed DRO model can be transformed into equivalent mixed-integer linear programs when the ambiguity sets incorporate all distributions within L 1 -norm and joint L 1 - and L ∞ -norms from a nominal (reference) distribution. A computational study of earthquakes in Iran is conducted to illustrate the applicability of the proposed DRO model to real-world problems. The experimental results demonstrate that our proposed DRO model has superior out-of-sample performance and can mitigate the effect of Optimization Bias compared to the traditional stochastic programming model. Some managerial insights regarding the proposed approach are provided based on numerical results. • A distributionally robust DRLP under option contract and demand ambiguity is introduced. • A two-stage mean-quantile-deviation-based DRO model is formulated. • Two kinds of discrepancy-based ambiguity sets are constructed to address the distributional ambiguity and derive the tractable forms. • Extensive numerical experiments are conducted on a realistic case study. [ABSTRACT FROM AUTHOR]
- Published
- 2023
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