Reliable location allocation for hazardous materials

Decision-making on location allocation has gained considerable attention since it involves strategic and operational policies with mid-term and long-term effects. In this paper, a reliable location allocation mechanism in the context of hazardous materials is proposed, considering that the depots are subject to the risk of disruption that may be caused by many factors, including hazardous materials depot accident, depot maintenance upgrade, equipment fault, and power outage. According to the characteristics of hazardous materials, this study aims to minimize the systemic risk of storage and transportation under budget constraints. The problem is formulated as an integer linear programming model to simultaneously determine: (i) the optimal depot locations; (ii) the amount of hazardous materials stored in each located depot; (iii) the optimal allocation (transportation) plans; and (iv) the contingency plans for depot disruption. Numerical examples demonstrate that the proposed modeling method leads to 8.33% risk reduction and 1.92% cost savings compared with traditional location allocation without disruption consideration. This reveals the necessity and importance of taking reliability into account and making contingency plans in disruption scenarios regarding hazardous materials location allocation decisions.