Research on location model of risk pooling with compensation policy

We summarized recent research aimed at expanding the context of facility location decisions to incorporate additional features of a supply chain including variable construction cost, inventory management, transportation cost, etc. Authors expended location model of risk pooling with variable construction cost (LMRPVCC) to construct location model of risking pool with variable construction cost with compensation policy. In a buyer market, logistics corporations may apply compensation policy in order to hold more customers by giving a discount transportation charge. Authors build a square nonlinear 0-1 integer-programming model and use particle swarm optimization algorithm to find suboptimum solutions. The numerical examples are given separately along with the models to evaluate the effectiveness of the model. According to the computational results, we can draw these conclusions: transport costs factor ß is positively related with the objective function value. Compensation cost factor W is positively related with the objective function value. Distribution radius D_r is negatively related with the objective function value.