Exact Solution to a Location Problem with Stochastic Demands

This paper considers a class of Capacitated Facility Location Problems in which customer demands are stochastic. The problem is formulated as a stochastic integer linear program, with first stage binary variables and second stage continuous variables. It is solved to optimality by means of a branch and cut method. Computational results are reported for problems involving up to 40 customers and 10 potential facility locations.