Optimal Location Patterns or When Facilities are Prone to Failure

  • chair:

    Institutskolloquium of the IOR

  • place:

    Building 11.40, room 214

  • :

    April 15th, 2010

  • Referent:

    Prof. Dmitry Krass, University of Toronto (Canada)

  • Zeit:

    17:30

Optimal Location Patterns or When Facilities are Prone to Failure

Service facilities may and do fail for a variety of reasons. In this paper we examine
the impact of failures on the optimal location patterns. We analyze the impact of
four factors: probability of failure, inter-facility correlations of failures, the information
available to the customer and the decision-maker’s objective function. By
choosing a simple setting (2 facilities on a line) we are able to obtain closed form
solutions and conduct full parametric analysis, yielding interesting managerial insights.
We also provide the decomposition of total system costs and evaluate values
of reliability and information.