Capacitated plant location-allocation problems with price sensitive stochastic demands

This paper addresses a capacitated transportation plant location-allocation problem with an objective of maximizing expected net profits. A quantitative model is developed which includes price sensitivity and stochastic demand. A heuristic algorithm and two optimizing algorithms are proposed as solution methodologies for location and allocation decisions. Both a normal and uniform distribution of demands are considered, and the relationships between price and quantity demanded are accounted for in the model. A heuristic which produces near optimal solutions within reasonable limits of percentage deviation is required for solving medium and large size problems. The heuristic algorithm also has a lower computation time.