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Surviving in a competitive spatial market: The threshold capture model
Serra, Daniel; Revelle, Charles; Rosing, Ken
Universitat Pompeu Fabra. Departament d'Economia i Empresa
Most facility location decision models ignore the fact that for a facility to survive it needs a minimum demand level to cover costs. In this paper we present a decision model for a firm thatwishes to enter a spatial market where there are several competitors already located. This market is such that for each outlet there is a demand threshold level that has to be achievedin order to survive. The firm wishes to know where to locate itsoutlets so as to maximize its market share taking into account the threshold level. It may happen that due to this new entrance, some competitors will not be able to meet the threshold and therefore will disappear. A formulation is presented together with a heuristic solution method and computational experience.
Operations Management
discrete facility location
competitive location
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