IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v24y1977i4p378-386.html
   My bibliography  Save this article

Facility Location with Price-Sensitive Demands: Private, Public, and Quasi-Public

Author

Listed:
  • Donald Erlenkotter

    (University of California, Los Angeles)

Abstract

We formulate a general model for an uncapacitated facility location problem in which demands are related to the prices established at the various locations. Pricing decisions and location decisions are determined simultaneously in this model, in contrast to traditional location models that assume fixed demands and prices. We show that a transformation of the general model is equivalent to the fixed-demand location model of Efroymson and Ray, and thus may be solved by any of the exact or heuristic methods available for that model. Specifying either a private sector objective of maximizing profits or a public sector objective of maximizing net social benefits provides a particular case of the general model. A third plausible objective is the "quasi-public" one of maximizing net social benefits subject to a constraint that ensures sufficient revenues to cover costs. A Lagrangian relaxation of this constraint, which yields another case of the general model, is used to develop a solution procedure for the quasi-public objective. Details of the solution approach are given for quadratic revenue functions, and an example illustrates the procedure.

Suggested Citation

  • Donald Erlenkotter, 1977. "Facility Location with Price-Sensitive Demands: Private, Public, and Quasi-Public," Management Science, INFORMS, vol. 24(4), pages 378-386, December.
  • Handle: RePEc:inm:ormnsc:v:24:y:1977:i:4:p:378-386
    DOI: 10.1287/mnsc.24.4.378
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.24.4.378
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Morton O’Kelly & Henrique Luna & Ricardo Camargo & Gilberto Miranda, 2015. "Hub Location Problems with Price Sensitive Demands," Networks and Spatial Economics, Springer, vol. 15(4), pages 917-945, December.
    2. Meng, Qiang & Huang, Yikai & Cheu, Ruey Long, 2009. "Competitive facility location on decentralized supply chains," European Journal of Operational Research, Elsevier, vol. 196(2), pages 487-499, July.
    3. Dominique Peeters & Jacques Thisse & Isabelle Thomas, 1998. "Transportation networks and the location of human activities," ERSA conference papers ersa98p268, European Regional Science Association.
    4. Geunes, Joseph & Shen, Zuo-Jun Max & Emir, Akin, 2007. "Planning and approximation models for delivery route based services with price-sensitive demands," European Journal of Operational Research, Elsevier, vol. 183(1), pages 460-471, November.
    5. Zhang, Yue, 2015. "Designing a retail store network with strategic pricing in a competitive environment," International Journal of Production Economics, Elsevier, vol. 159(C), pages 265-273.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:24:y:1977:i:4:p:378-386. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Matthew Walls). General contact details of provider: http://edirc.repec.org/data/inforea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.