Solving the competitive discretionary service facility location problem

Many customers purchase service as part of routine pre-planned trips nowadays, instead of making a special-purpose trip to obtain service. The decision objective for service providers is to find the optimal locations for such service facilities to maximize the number of customers ‘captured’. This sort of problem is usually called a ‘flow-capturing location allocation problem’ (FCLAP). However, studies of this issue in the past seem to ignore the fact that the facilities compete with each other regardless of whether they are of the same or a different chain. The competitive FCLAP is, thus, addressed to this study. Both a mathematical model and a greedy-based heuristic are developed. The greedy heuristic algorithm presented solves the example network adopted from the literature with competitive results obtained, especially with the CPU times consumed being much less than those for the optimal approach. Apart from the small and contrived test problem, this heuristic has also been applied to an authentic network in Yuanlin, Changhua, Taiwan.