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Correlations In Stochastic Programming: A Case From Stochastic Service Network Design

Author

Listed:
  • ARNT-GUNNAR LIUM

    (P.O. Box 2110 NO-6402 Molde, Norway)

  • TEODOR GABRIEL CRAINIC

    (Centre de recherche sur les transports, Université de Montréal, C.P. 6128, succ. Centre-ville, Montréal QC, Canada H3C 3J7, Canada)

  • STEIN W. WALLACE

    (P.O. Box 2110 NO-6402 Molde, Norway)

Abstract

Deterministic models, even if used repeatedly, will not capture the essence of planning in an uncertain world. Flexibility and robustness can only be properly valued in models that use stochastics explicitly, such as stochastic optimization models. However, it may also be very important to capture how the random phenomena arerelatedto one another. In this article we show how the solution to a stochastic service network design model depends heavily on the correlation structure among the random demands. The major goal of this paper is to discusswhythis happens, and to provide insights into the effects of correlations on solution structures. We illustrate by an example.

Suggested Citation

  • Arnt-Gunnar Lium & Teodor Gabriel Crainic & Stein W. Wallace, 2007. "Correlations In Stochastic Programming: A Case From Stochastic Service Network Design," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 24(02), pages 161-179.
    • Handle: RePEc:wsi:apjorx:v:24:y:2007:i:02:n:s0217595907001206
    DOI: 10.1142/S0217595907001206
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    Citations

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    Cited by:

    1. Lanza, Giacomo & Crainic, Teodor Gabriel & Rei, Walter & Ricciardi, Nicoletta, 2021. "Scheduled service network design with quality targets and stochastic travel times," European Journal of Operational Research, Elsevier, vol. 288(1), pages 30-46.
    2. Xin Wang & Stein W. Wallace, 2016. "Stochastic scheduled service network design in the presence of a spot market for excess capacity," EURO Journal on Transportation and Logistics, Springer;EURO - The Association of European Operational Research Societies, vol. 5(4), pages 393-413, December.
    3. Kaut, Michal & Vaagen, Hajnalka & Wallace, Stein W., 2021. "The combined impact of stochastic and correlated activity durations and design uncertainty on project plans," International Journal of Production Economics, Elsevier, vol. 233(C).
    4. Wagner, Stephan M. & Bode, Christoph & Koziol, Philipp, 2011. "Negative default dependence in supplier networks," International Journal of Production Economics, Elsevier, vol. 134(2), pages 398-406, December.
    5. Wang, Xin & Fagerholt, Kjetil & Wallace, Stein W., 2018. "Planning for charters: A stochastic maritime fleet composition and deployment problem," Omega, Elsevier, vol. 79(C), pages 54-66.
    6. Arnt-Gunnar Lium & Teodor Gabriel Crainic & Stein W. Wallace, 2009. "A Study of Demand Stochasticity in Service Network Design," Transportation Science, INFORMS, vol. 43(2), pages 144-157, May.
    7. Wang, Yulan & Wallace, Stein W. & Shen, Bin & Choi, Tsan-Ming, 2015. "Service supply chain management: A review of operational models," European Journal of Operational Research, Elsevier, vol. 247(3), pages 685-698.
    8. Biju Thapalia & Stein Wallace & Michal Kaut & Teodor Crainic, 2012. "Single source single-commodity stochastic network design," Computational Management Science, Springer, vol. 9(1), pages 139-160, February.
    9. Xin Wang & Teodor Gabriel Crainic & Stein W. Wallace, 2019. "Stochastic Network Design for Planning Scheduled Transportation Services: The Value of Deterministic Solutions," INFORMS Journal on Computing, INFORMS, vol. 31(1), pages 153-170, February.
    10. Teodor Gabriel Crainic & Fausto Errico & Walter Rei & Nicoletta Ricciardi, 2016. "Modeling Demand Uncertainty in Two-Tier City Logistics Tactical Planning," Transportation Science, INFORMS, vol. 50(2), pages 559-578, May.

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