Customer Allocation in Maximum Capture Problems

The maximum capture (MAXCAP) model and its variants have been widely used to find the maximum capture that a firm can get as it enters a spatial market where there are already existing (competitor’s) facilities. While the model obtains the optimal demand capture, it however allows the customers to be assigned to the non‐closest facility which may incur additional operating costs. A two stage method can be used that overcomes the drawback of the original model while requiring a negligible extra computational effort. To make the original model mathematically self contained and more concise two revised formulations of the problem RMAXCAP‐1 and RMAXCAP‐2 are proposed which assure that the customers patronize only their closest entering facilities. These models are tested on different sizes of datasets and their performances are compared.