Optimal Location Patterns or When Facilities are Prone to Failure

  • Tagung:

    Institutskolloquium des IOR

  • Tagungsort:

    Gebäude 11.40, Raum 214

  • Datum:

    15. April 2010

  • Referent:

    Prof. Dmitry Krass, University of Toronto (Kanada)

  • Zeit:

    17:30 Uhr

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.