Optimal Location of Discretionary Service Facilities

Oded Berman, Richard C. Larson and Nikoletta Fouska
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Oded Berman: University of Toronto, Toronto, Ontario, Canada M5S 1V4
Richard C. Larson: Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
Nikoletta Fouska: Oliver, Wyman, and Company, New York, New York 10036

Transportation Science, 1992, vol. 26, issue 3, 201-211

Abstract: Automatic teller machines and gasoline service stations are two examples of a growing number of “discretionary service facilities.” In consuming service from these facilities, a significant fraction of customers do so on an otherwise preplanned trip (e.g., on the daily commute to and from work). A system planner, in determining the best locations of such facilities, is more concerned with placing the facilities along paths of customer flow rather than, say, near the center of a cluster of residences or work places. We formally model this problem and present a method for determining the optimal locations of m discretionary service facilities so as to intercept the maximum possible potential customer flow. We also show how to determine the minimal number of facilities required to intercept a prespecified fraction of total customer flow. Computational results are included.

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ortrsc:v:26:y:1992:i:3:p:201-211

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