Stochastic Optimization for Natural Disaster Asset Prepositioning

Abstract

A key strategic issue in pre‐disaster planning for humanitarian logistics is the pre‐establishment of adequate capacity and resources that enable efficient relief operations. This paper develops a two‐stage stochastic optimization model to guide the allocation of budget to acquire and position relief assets, decisions that typically need to be made well in advance before a disaster strikes. The optimization focuses on minimizing the expected number of casualties, so our model includes first‐stage decisions to represent the expansion of resources such as warehouses, medical facilities with personnel, ramp spaces, and shelters. Second‐stage decisions concern the logistics of the problem, where allocated resources and contracted transportation assets are deployed to rescue critical population (in need of emergency evacuation), deliver required commodities to stay‐back population, and transport the transfer population displaced by the disaster. Because of the uncertainty of the event's location and severity, these and other parameters are represented as scenarios. Computational results on notional test cases provide guidance on budget allocation and prove the potential benefit of using stochastic optimization.