Stochastic Dynamic Location Analysis

Richard E. Rosenthal, John A. White and Donovan Young
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Richard E. Rosenthal: University of Tennessee
John A. White: Georgia Institute of Technology
Donovan Young: Georgia Institute of Technology

Management Science, 1978, vol. 24, issue 6, 645-653

Abstract: This research introduces methods of stochastic decision processes into location analysis. The specific model concerns making dynamic relocation decisions for a new facility (server) that must interact with existing facilities (customers) whose relocations are stochastic processes. The model is an infinite-horizon Markov decision chain whose solution gives a server relocation policy that minimizes the expected discounted sum of costs. Costs are location-dependent and are incurred in two ways: when the server makes choice relocations and when the server interacts with customers. The model captures the essence of a variety of familiar dynamic location decision situations. Some methodological developments that allow solution of large problems are reported.

Date: 1978
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:24:y:1978:i:6:p:645-653

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