Facility location problem with data uncertainty for quality rice development

Rice is one of the most important agriculture products for Thailand. Thailand has exported rice since Ayutthaya period. Under a highly competitive environment among rice exporters, Thailand´s low grade rice is not competitive in the market. Thailand exporters change their strategy by entering into niche market. To gain competitive advantage, quality and safety of rice must be maintained either for domestic market or international market. The quality refining rice facility is an important factor to improve quality of rice and ensure consumer´s safety. The location of quality refining rice facility determines the overall distribution cost. The paper first formulates the problem as p-median and then presents a robust counterpart optimization model to address data uncertainty of rice production in farming area in Thailand. The proposed model is tested against rice production data in Thailand from 2008 to 2012. The results show that Bangkok, Chonburi, Nakorn Ratchasima, and Nakorn Sawan are selected to be quality refining rice facility sites.