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The maximum return-on-investment plant location problem with market share

Author

Listed:
  • J Brimberg

    (Royal Military College of Canada)

  • P Hansen

    (GERAD and HEC)

  • G Laporte

    (CRT and HEC)

  • N Mladenović

    (GERAD and HEC
    University of Birmingham)

  • D Urošević

    (Mathematical Institute, SANU)

Abstract

This paper examines the plant location problem under the objective of maximizing return-on-investment. However, in place of the standard assumption that all demands must be satisfied, we impose a minimum acceptable level on market share. The model presented takes the form of a linear fractional mixed integer program. Based on properties of the model, a local search procedure is developed to solve the problem heuristically. Variable neighbourhood search and tabu search heuristics are also developed and tested. Thus, a useful extension of the simple plant location problem is examined, and heuristics are developed for the first time to solve realistic instances of this problem.

Suggested Citation

  • J Brimberg & P Hansen & G Laporte & N Mladenović & D Urošević, 2008. "The maximum return-on-investment plant location problem with market share," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(3), pages 399-406, March.
    • Handle: RePEc:pal:jorsoc:v:59:y:2008:i:3:d:10.1057_palgrave.jors.2602349
    DOI: 10.1057/palgrave.jors.2602349
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    References listed on IDEAS

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    Cited by:

    1. Marchioni, Andrea & Magni, Carlo Alberto, 2018. "Investment decisions and sensitivity analysis: NPV-consistency of rates of return," European Journal of Operational Research, Elsevier, vol. 268(1), pages 361-372.
    2. Menezes, Mozart B.C. & Kim, Seokjin & Huang, Rongbing, 2015. "Return-on-investment (ROI) criteria for network design," European Journal of Operational Research, Elsevier, vol. 245(1), pages 100-108.
    3. Pierre Hansen & Nenad Mladenović & José Moreno Pérez, 2010. "Variable neighbourhood search: methods and applications," Annals of Operations Research, Springer, vol. 175(1), pages 367-407, March.

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