Facility Dependent Distance Decay in Competitive Location

Abstract

In this paper we propose a simple general framework for obtaining facility dependent distance decay function in competitive location models. As the distance increases, the decay in patronage by more attractive facilities is slower than the decay by less attractive facilities. This implies that by using only the distribution patterns of neighborhoods from which facility’s patrons originated, the facility dependent decay approach implicitly accounts for the varying degrees of facilities’ attractiveness. No modifications are required in order to apply existing solution algorithms to the new model. The effectiveness and accuracy of the new approach is demonstrated using a real data set.