A scenario-based hazardous material network design problem with emergency response and toll policy

Abstract

In the process of shipping hazmats on a road network from origins to destinations, two stakeholders are involved: The authorities who are concerned about the risk of incidents, and the carriers who are concerned about shipping costs. We propose a bilevel model in order to account for the conflicting interests of the two parties. The upper-level (authorities) use different policies: Proactive policies including roadclosure, road-construction and toll policies, and Reactive policies including locating hazmat response teams. Furthermore, scenario-based uncertainty is considered to reflect the variations in demand and shipments. Due to the complexity of the bilevel model, we develop two methods to solve the problem. First, using dual variables and constraints, we reformulate our bilevel model into a single-level model. This method gives us exact optimal solutions. Second, a two-stage heuristic algorithm gives us solutions which are close to the optimal solutions. Then, based on a transportation network in China, experimental results and several sensitivity analyses are presented.