Task No.

02

Summary of the sections 2, 3 and 4.1 of the given paper.

The aim of the paper was to design a network among facilities and demand locations that
will minimize transportation cost where the capacity of network’s links has limited flow
and the capacity of the facilities is a function of occurring a disruption and allocation of
protection resources. The uncertainty in the capacity of the facilities due to the intensity
of the disruption is a factor that is not within the control of the firm (i.e. exogenous
uncertainty). The level of protection resources is allotted to the facilities to protect against
disruptions is a factor that is within the control of the firm (i.e. endogenous uncertainty)
with the challenges to determine the amount of protection resources by predicting the
intensity and location of the disruption since the protection resources are limited too.

A single disruption will affect different facilities at different intensity and thus the post-
disruption capacity (under a conditional probability function) depending on the location
of the facilities, and this will generate a set of scenarios. Then the probabilities of
occurring a disruption which can be found firm’s historical data and predictive analysis is
enhanced to the conditional probability function. This final probability function is
multiplied with the variable that represents the amount of flow through network’s links
for a scenario.

But the problem is, inside the probability function there is a binary variable that represents
if a certain amount of protection resources is allotted to a facility which makes the model
nonlinear and non-convex. The allocation of protection resources should affect the
amount of flow through network’s links linearly. This model is then linearized by getting
the protection resources variable out of probability function and combining with flow
variable through network’s links.