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The competitive facility location problem under disruption risks

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  • Zhang, Ying
  • Snyder, Lawrence V.
  • Ralphs, Ted K.
  • Xue, Zhaojie

Abstract

Two players sequentially locate a fixed number of facilities, competing to capture market share. Facilities face disruption risks, and each customer patronizes the nearest operational facility, regardless of who operates it. The problem therefore combines competitive location and location with disruptions. This combination has been absent from the literature. We model the problem as a Stackelberg game in which the leader locates facilities first, followed by the follower, and formulate the leader’s decision problem as a bilevel optimization problem. A variable neighborhood decomposition search heuristic which includes variable fixing and cut generation is developed. Computational results suggest that high quality solutions can be found quickly. Interesting managerial insights are drawn.

Suggested Citation

  • Zhang, Ying & Snyder, Lawrence V. & Ralphs, Ted K. & Xue, Zhaojie, 2016. "The competitive facility location problem under disruption risks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 453-473.
    • Handle: RePEc:eee:transe:v:93:y:2016:i:c:p:453-473
    DOI: 10.1016/j.tre.2016.07.002
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    3. Yu, Guodong & Haskell, William B. & Liu, Yang, 2017. "Resilient facility location against the risk of disruptions," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 82-105.
    4. Ata Allah Taleizadeh & Ali Ghavamifar & Amir Khosrojerdi, 2022. "Resilient network design of two supply chains under price competition: game theoretic and decomposition algorithm approach," Operational Research, Springer, vol. 22(1), pages 825-857, March.
    5. Sinha, Priyank & Kumar, Sameer & Chandra, Charu, 2023. "Strategies for ensuring required service level for COVID-19 herd immunity in Indian vaccine supply chain," European Journal of Operational Research, Elsevier, vol. 304(1), pages 339-352.
    6. Ghavamifar, Ali & Makui, Ahmad & Taleizadeh, Ata Allah, 2018. "Designing a resilient competitive supply chain network under disruption risks: A real-world application," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 115(C), pages 87-109.
    7. Dolores R. Santos-Peñate & Clara M. Campos-Rodríguez & José A. Moreno-Pérez, 2020. "A Kernel Search Matheuristic to Solve The Discrete Leader-Follower Location Problem," Networks and Spatial Economics, Springer, vol. 20(1), pages 73-98, March.
    8. Amiri-Aref, Mehdi & Farahani, Reza Zanjirani & Hewitt, Mike & Klibi, Walid, 2019. "Equitable location of facilities in a region with probabilistic barriers to travel," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 127(C), pages 66-85.
    9. Shamekhi Amiri, A. & Torabi, S. Ali & Ghodsi, R., 2018. "An iterative approach for a bi-level competitive supply chain network design problem under foresight competition and variable coverage," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 109(C), pages 99-114.
    10. Liu, Weiwei & Kong, Nan & Wang, Mingzheng & Zhang, Lingling, 2021. "Sustainable multi-commodity capacitated facility location problem with complementarity demand functions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    11. Jalali, Sajjad & Seifbarghy, Mehdi & Niaki, Seyed Taghi Akhavan, 2018. "A risk-averse location-protection problem under intentional facility disruptions: A modified hybrid decomposition algorithm," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 196-219.
    12. Wuyang Yu, 2019. "A leader-follower model for discrete competitive facility location problem under the partially proportional rule with a threshold," PLOS ONE, Public Library of Science, vol. 14(12), pages 1-16, December.

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