The maximum capture per unit cost location problem

Guowei Hua, Edwin Tai Chiu Cheng, Shouyang Wang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

12 Citations (Scopus)

Abstract

This paper considers the problem of siting p new facilities of an entering firm to a competitive market so as to maximize the market share captured from competitors per unit cost. We first formulate the problem as a mixed 0-1 fractional programming model, in which we incorporate the fixed cost and transportation cost. The model can deal with the case where some demand nodes have two or more possible closest servers. We then re-formulate the problem as a 01 mixed integer linear program. We use a one-opt heuristic algorithm based on the TeitzBart method to obtain feasible solutions and compare them with the optimal solutions obtained by a branch-and-bound algorithm. We conduct computational experiments to evaluate the two algorithms. The results show that both algorithms can solve the model efficiently and the model is integer-friendly. We discuss other computational results and provide managerial insights.
Original languageEnglish
Pages (from-to)568-574
Number of pages7
JournalInternational Journal of Production Economics
Volume131
Issue number2
DOIs
Publication statusPublished - 1 Jun 2011

Keywords

  • Branch-and-bound
  • Competitive location
  • Maximum capture
  • Mixed integer fractional programming

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

Cite this