A multi-facility location model with partial satisfaction of demand

The standard uncapacitated plant location problem requires locating facilities on a network to service the demands on the network at a minimum total cost. It is assumed that the demand at each customer site must be satisfied. In this paper we consider a generalized version of the problem where acceptance of demands becomes part of the decision process. This leads to a bicriterion decision model which allows the manager–planner to study the tradeoff between total manufacturing and distribution costs and the proportion of demand which will be serviced. A simple algorithm is outlined to construct the trade-off curve of efficient solutions, and provide the decision-maker with marginal costs of servicing the demand.