Two-echelon Integrated Competitive/uncompetitive Facility Location with Elastic Customer Demand

This paper describes a bi-level programming model that addresses the two-echelon integrated competitive/uncompetitive facility location problem in a distribution system design. The proposed objective function maximizes the entire profit of the distribution system subject to constraints on the investment budget. Unlike most of past research, our study allows for dynamic planning horizon, distribution of commodities, configuration of multi-echelon facility, availability of capital for investment, competition existing in stores, customer choice behavior and storage limitation. Since such a distribution system design problem belongs to a class of NP-hard problem, a genetic algorithm-based heuristic (GA) is presented and compared with random search solution using numerical example. The computational results show that the GA approach is efficient.