Extra-capacity versus protection for supply networks under attack

Abstract

This article develops a game-theoretical model to deal with the protection of facilities, in the context of the capacitated fixed-charge location and capacity acquisition problem. A set of investment alternatives is available for direct protection of facilities. Furthermore, extra-capacity of neighbouring functional facilities can be used after attacks to avoid the backlog of demands and backorders. The proposed model considers a non-cooperative two-period game between the players, and an algorithm is presented to determine the equilibrium solution and the optimal defender strategy under capacity constraints. A method is developed to evaluate the utilities of the defender and the attacker. The benefit of the proposed approach is illustrated using a numerical example. The defence strategy of our model is compared to other strategies, and the obtained results clearly indicate the superiority of our model in finding the best trade-off between direct protection investment and extra-capacity deployment.