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Joint location and pricing within a user-optimized environment

Author

Listed:
  • Teodora Dan

    (Université de Montréal)

  • Andrea Lodi

    (Polytechnique Montréal)

  • Patrice Marcotte

    (Université de Montréal)

Abstract

In the design of service facilities, whenever the behaviour of customers is impacted by queueing or congestion, the resulting equilibrium cannot be ignored by a firm that strives to maximize revenue within a competitive environment. In the present work, we address the problem faced by a firm that makes decisions with respect to location, service levels and prices and that takes explicitly into account user behaviour. This situation is modelled as a nonlinear mathematical program with equilibrium constraints that involves both discrete and continuous variables, and for which we propose an efficient algorithm based on an approximation that can be solved for its global optimum.

Suggested Citation

  • Teodora Dan & Andrea Lodi & Patrice Marcotte, 2020. "Joint location and pricing within a user-optimized environment," EURO Journal on Computational Optimization, Springer;EURO - The Association of European Operational Research Societies, vol. 8(1), pages 61-84, March.
    • Handle: RePEc:spr:eurjco:v:8:y:2020:i:1:d:10.1007_s13675-019-00120-w
    DOI: 10.1007/s13675-019-00120-w
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    References listed on IDEAS

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    Cited by:

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    3. Hoseinpour, Pooya & Jalili Marand, Ata, 2022. "Designing a service system with price- and distance-sensitive demand: A case study in mining industry," European Journal of Operational Research, Elsevier, vol. 303(3), pages 1355-1371.
    4. Lin, Yun Hui & Tian, Qingyun, 2023. "Facility location and pricing problem: Discretized mill price and exact algorithms," European Journal of Operational Research, Elsevier, vol. 308(2), pages 568-580.

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