Discrete Competitive Facility Location by Ranking Candidate Locations

Competitive facility location is a strategic decision for firms providing goods or services and competing for the market share in a geographical area. There are different facility location models and solution procedures proposed in the literature which vary on their ingredients, such as location space, customer behavior, objective function(s), etc. In this paper we focus on two discrete competitive facility location problems: a single objective discrete facility location problem for an entering firm and a bi-objective discrete facility location problem for firm expansion. Two random search algorithms for discrete facility location based on ranking of candidate locations are described and the results of their performance investigation are discussed. It is shown that the ranking of candidate locations is a suitable strategy for discrete facility location as the algorithms are able to determine the optimal solution for different instances of the facility location problem or approximate the optimal solution with a reasonable accuracy.