Abstract

In an increasingly interconnected global marketplace, the resilience of supply chains is crucial for ensuring the uninterrupted flow of goods and services. This paper addresses the Reliable Facility Location Problem (RFLP) within a two-echelon supply chain network, focusing on the fortification of facilities to mitigate risks posed by potential disruptions. We model the decision-making process for locating and fortifying facilities at candidate sites, incorporating fixed location costs alongside two distinct fortification cost functions: linear and non-linear. The objective is to minimize total costs related to facility location, fortification, and transportation while ensuring that each customer is served by both a primary and a backup facility. The model with the linear fortification cost function employs a two-reliability framework, allowing for either fully fortified or unfortified facilities. In contrast, the non-linear fortification model introduces complexity by allowing for partial fortification, thus reflecting more realistic scenarios. Both models are solved using a Lagrange relaxation method, yielding near-optimal solutions. Our findings emphasize the strategic importance of investing in facility fortification as a means of enhancing supply chain reliability and resilience against disruptions. This research contributes to the development of robust supply chain networks capable of navigating the complexities of modern logistical challenges, highlighting the need for effective strategies in facility location and risk management.