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A GIS-based optimization framework for competitive multi-facility location-routing problem

Bozkaya, Burçin and Yanık, Seda and Balcısoy, Selim (2010) A GIS-based optimization framework for competitive multi-facility location-routing problem. Networks and Spatial Economics (Sp. Iss. SI), 10 (3). pp. 297-320. ISSN 1566-113X

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Official URL: http://dx.doi.org/10.1007/s11067-009-9127-6

Abstract

In a dynamic market setting, firms need to quickly respond to shifting demographics and economic conditions. In this paper, we investigate the problem of determining the optimum set of locations for a firm, which operates a chain of facilities under competition. We consider the objective of maximizing profit, defined as gross profit margin minus logistics costs. We propose a location-routing model where revenue is realized according to probabilistic patronization of customers and routing costs are incurred due to vehicles serving the open facilities from a central depot. We propose a hybrid heuristic optimization methodology for solving this model. The optimal locations are searched for by a Genetic Algorithm while an integrated Tabu Search algorithm is employed for solving the underlying vehicle routing problem. The solution approach is tested on a real dataset of a supermarket chain. The results show that the location decisions made by the proposed methodology lead to increased market share and profit margin, while keeping logistics costs virtually unchanged. Finally, we present a GIS-based framework that can be used to store, analyze and visualize all data as well as model solutions in geographic format.

Item Type:Article
Uncontrolled Keywords:Competitive facility location; Location-routing; Meta-heuristics; Genetic algorithm; GIS
Subjects:T Technology > T Technology (General) > T055.4-60.8 Industrial engineering. Management engineering
T Technology > T Technology (General) > T055.4-60.8 Industrial engineering. Management engineering > T57.6-57.97 Operations research. Systems analysis
ID Code:14267
Deposited By:Burçin Bozkaya
Deposited On:24 Aug 2010 11:20
Last Modified:25 May 2011 14:17

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