A GISBased Optimization Framework for Competitive

Authors: Burcin Bozkaya Seda Yanik Selim Balcisoy

Publish Date: 2010/01/23

Volume: 10, Issue: 3, Pages: 297-320

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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 locationrouting 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 GISbased framework that can be used to store analyze and visualize all data as well as model solutions in geographic format

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