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Modelling lost demand in competitive facility location

Author

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  • T Drezner

    (Steven G. Mihaylo College of Business and Economics, California State University-Fullerton, Fullerton, USA)

  • Z Drezner

    (Steven G. Mihaylo College of Business and Economics, California State University-Fullerton, Fullerton, USA)

Abstract

In this paper, we propose a simple new approach to model lost demand (also referred to as elastic demand) in competitive facility location. A ‘dummy’ competing facility that attracts the lost demand is added to the list of competing facilities. All competitive facility location models, regardless of their complexity or assumptions, can be modified to include lost demand and be solved by the same algorithms designed for standard models once the dummy facility is added to the data as an additional competitor.

Suggested Citation

  • T Drezner & Z Drezner, 2012. "Modelling lost demand in competitive facility location," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(2), pages 201-206, February.
    • Handle: RePEc:pal:jorsoc:v:63:y:2012:i:2:p:201-206
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    Citations

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    Cited by:

    1. Tammy Drezner & Zvi Drezner & Pawel Kalczynski, 2020. "Gradual cover competitive facility location," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 42(2), pages 333-354, June.
    2. Tammy Drezner & Morton O’Kelly & Zvi Drezner, 2023. "Multipurpose shopping trips and location," Annals of Operations Research, Springer, vol. 321(1), pages 191-208, February.
    3. Drezner, Zvi & Eiselt, H.A., 2024. "Competitive location models: A review," European Journal of Operational Research, Elsevier, vol. 316(1), pages 5-18.
    4. Tiyachareonsri, Sirikunya & Chavarnakul, Thira & Chandrachai, Achara & Triukose, Sipat, 2024. "How consumer preference determines site selection in a metropolitan setting: Analysis of retailer perspective to stay ahead of the competition in the aftermath of a large-scale crisis," Journal of Retailing and Consumer Services, Elsevier, vol. 78(C).
    5. Carling, Kenneth & Han, Mengjie & Håkansson, Johan & Rebreyend, Pascal, 2015. "Testing the gravity p-median model empirically," Operations Research Perspectives, Elsevier, vol. 2(C), pages 124-132.
    6. Tammy Drezner & Zvi Drezner & Atsuo Suzuki, 2019. "A cover based competitive facility location model with continuous demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 66(7), pages 565-581, October.
    7. Christian Burkart & Pamela C. Nolz & Walter J. Gutjahr, 2017. "Modelling beneficiaries’ choice in disaster relief logistics," Annals of Operations Research, Springer, vol. 256(1), pages 41-61, September.
    8. Shamekhi Amiri, A. & Torabi, S. Ali & Ghodsi, R., 2018. "An iterative approach for a bi-level competitive supply chain network design problem under foresight competition and variable coverage," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 109(C), pages 99-114.
    9. Gutjahr, Walter J. & Dzubur, Nada, 2016. "Bi-objective bilevel optimization of distribution center locations considering user equilibria," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 85(C), pages 1-22.
    10. Suárez-Vega, Rafael & Gutiérrez-Acuña, José Luis & Rodríguez-Díaz, Manuel, 2019. "Using a productivity function based method to design a new shopping centre," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 176-185.

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