Flow intercepting spatial interaction model: A new approach to optimal location of competitive facilities

In this paper we propose a flexible new model for the location of competitive facilities that may derive their demand for service from both special-purpose purchase trips by their customers and from ‘intercepting’ customers passing by a facility while en route to another destination on the network. Our model combines the features of the spatial interaction and flow interception models. An efficient heuristic procedure is developed, with worst case analysis provided. We also develop a tight upper bound and a branch-and-bound scheme for our model. Results of a set of computational experiments are presented.