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Optimal Location of Discretionary Service Facilities

Author

Listed:
  • Oded Berman

    (University of Toronto, Toronto, Ontario, Canada M5S 1V4)

  • Richard C. Larson

    (Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Nikoletta Fouska

    (Oliver, Wyman, and Company, New York, New York 10036)

Abstract

Automatic teller machines and gasoline service stations are two examples of a growing number of “discretionary service facilities.” In consuming service from these facilities, a significant fraction of customers do so on an otherwise preplanned trip (e.g., on the daily commute to and from work). A system planner, in determining the best locations of such facilities, is more concerned with placing the facilities along paths of customer flow rather than, say, near the center of a cluster of residences or work places. We formally model this problem and present a method for determining the optimal locations of m discretionary service facilities so as to intercept the maximum possible potential customer flow. We also show how to determine the minimal number of facilities required to intercept a prespecified fraction of total customer flow. Computational results are included.

Suggested Citation

  • Oded Berman & Richard C. Larson & Nikoletta Fouska, 1992. "Optimal Location of Discretionary Service Facilities," Transportation Science, INFORMS, vol. 26(3), pages 201-211, August.
    • Handle: RePEc:inm:ortrsc:v:26:y:1992:i:3:p:201-211
    DOI: 10.1287/trsc.26.3.201
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