Outer approximation and submodular cuts for maximum capture facility location problems with random utilities

Ivana Ljubić and Eduardo Moreno

European Journal of Operational Research, 2018, vol. 266, issue 1, 46-56

Abstract: We consider a family of competitive facility location problems in which a “newcomer” company enters the market and has to decide where to locate a set of new facilities so as to maximize its market share. The multinomial logit model is used to estimate the captured customer demand. We propose a first branch-and-cut approach for this family of difficult mixed-integer non-linear problems. Our approach combines two types of cutting planes that exploit particular properties of the objective function: the first one are the outer-approximation cuts and the second one are the submodular cuts.

Keywords: Combinatorial optimization; Branch-and-cut; Maximum capture; Random utility model; Competitive facility location (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:266:y:2018:i:1:p:46-56

DOI: 10.1016/j.ejor.2017.09.023

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