Technical Note—Financial Market Approaches to Facility Location under Uncertainty

James E. Hodder
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James E. Hodder: Stanford University, Stanford, California

Operations Research, 1984, vol. 32, issue 6, 1374-1380

Abstract: This paper examines financial market approaches for facility location models incorporating uncertainty and risk aversion. As an example, it compares a model based on the Capital Asset Pricing Model with one using a mean-variance objective function. There are dramatically different computational implications; the financial market approach yields simpler procedures and is able to handle more complex problems. However, as discussed in the concluding observations, there are situations where the financial market perspective is less appropriate; consequently, the mean-variance model still has a role in analyzing facility location decisions.

Keywords: 185 facility location under uncertainty; 198 financial market criteria in facility location decisions (search for similar items in EconPapers)
Date: 1984
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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:32:y:1984:i:6:p:1374-1380

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