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Strategic competitive location: improving existing and establishing new facilities

Author

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  • T Drezner

    (California State University-Fullerton, Fullerton, CA, USA)

  • Z Drezner

    (California State University-Fullerton, Fullerton, CA, USA)

  • P Kalczynski

    (California State University-Fullerton, Fullerton, CA, USA)

Abstract

Competitive facility location models consider two main strategies for increasing the market share captured by a chain subject to a budget constraint. One strategy is the improvement of existing facilities. The second strategy is the construction of new facilities. In this paper we analyse these two strategies as well as the joint strategy which is a combination of the two. All three strategies are formulated as a unified model. The best solution to an individual strategy is a feasible solution to the joint one. Therefore, the joint strategy must yield solutions that are at least as good as the solutions to each of the individual strategies. Based on the results of extensive experiments, we conclude that the increase in market share captured by a chain when the joint strategy is employed can be significantly higher than increases obtained by individual strategies. A branch and bound procedure and a tabu search heuristic are constructed for the solution of the unified model. Both algorithms performed very well on a set of test problems with up to 900 demand points. A total of 62% of the test problems were optimally solved by the branch and bound procedure.

Suggested Citation

  • T Drezner & Z Drezner & P Kalczynski, 2012. "Strategic competitive location: improving existing and establishing new facilities," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(12), pages 1720-1730, December.
    • Handle: RePEc:pal:jorsoc:v:63:y:2012:i:12:p:1720-1730
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    Citations

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    Cited by:

    1. Tammy Drezner & Zvi Drezner & Dawit Zerom, 2023. "The Obnoxious Competitive Facility Location Model," Networks and Spatial Economics, Springer, vol. 23(4), pages 885-903, December.
    2. Tammy Drezner & Zvi Drezner & Pawel Kalczynski, 2020. "Gradual cover competitive facility location," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 42(2), pages 333-354, June.
    3. Fernández, José & Hendrix, Eligius M.T., 2013. "Recent insights in Huff-like competitive facility location and design," European Journal of Operational Research, Elsevier, vol. 227(3), pages 581-584.
    4. Tammy Drezner & Zvi Drezner & Dawit Zerom, 2020. "Facility Dependent Distance Decay in Competitive Location," Networks and Spatial Economics, Springer, vol. 20(4), pages 915-934, December.
    5. 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.
    6. Mejía, Gonzalo & Aránguiz, Raúl & Espejo-Díaz, Julián Alberto & Granados-Rivera, Daniela & Mejía-Argueta, Christopher, 2023. "Can street markets be a sustainable strategy to mitigate food insecurity in emerging countries? Insights from a competitive facility location model," Socio-Economic Planning Sciences, Elsevier, vol. 86(C).
    7. Tammy Drezner & Zvi Drezner & Atsuo Suzuki, 2019. "A cover based competitive facility location model with continuous demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 66(7), pages 565-581, October.
    8. Tammy Drezner & Zvi Drezner & Pawel Kalczynski, 2019. "A directional approach to gradual cover," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 27(1), pages 70-93, April.
    9. Vladimir Marianov & H. A. Eiselt, 2016. "On agglomeration in competitive location models," Annals of Operations Research, Springer, vol. 246(1), pages 31-55, November.
    10. Carling, Kenneth & Han, Mengjie & Håkansson, Johan & Rebreyend, Pascal, 2015. "Testing the gravity p-median model empirically," Operations Research Perspectives, Elsevier, vol. 2(C), pages 124-132.

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