Public Facilities Location under Elastic Demand

Abstract

While most of the existing work on public sector location models has been developed in the context of emergency facilities, the location problem of nonemergency facilities differs in the location objective and in the elastic nature of demand. The proper location objective under elastic demand is that of maximizing Consumers' Surplus (CS). Based on a proposed framework, we formulate the CS location objective under different demand functions, representing different demand behaviors. We prove that the CS function is convex and therefore the search for optimal locations can be restricted to nodes. We present integer programming formulations of the Maximum Consumers' Surplus Location problem (MCSLP) and its generalization which includes fixed facility cost. A computational analysis compares the location behaviors under elastic and inelastic demands, and investigates the effects of demand function (demand behavior) on location behavior.