A congested facility location problem with strategic customers

Ata Jalili Marand and Pooya Hoseinpour

European Journal of Operational Research, 2024, vol. 318, issue 2, 442-456

Abstract: This study addresses a user-equilibrium congested facility location problem with delay-, accessibility-, and price-sensitive customers. A profit-maximizing service provider first makes location, service rate, and pricing decisions, and then strategic customers decide which facilities to patronize (if any). By incorporating the customers’ choice behavior as a set of equilibrium constraints into the service provider’s decision problem, the problem is modeled as a mixed integer non-linear program which is then reformulated as a mixed integer second-order cone program. The proposed model, tested on several standard instances, is shown to be efficiently solvable using commercial software packages.

Keywords: OR in service industries; Pricing; Queueing; Mathematical programming with equilibrium constraints; Mixed-integer second-order cone programming (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:318:y:2024:i:2:p:442-456

DOI: 10.1016/j.ejor.2024.05.026

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