Optimal Location of Discretionary Service Facilities

TLDR

Discretionary service facilities such as ATMs and gas stations are increasingly common, and planners prioritize locating them along customer travel routes rather than simply near residential or workplace clusters. The study formalizes the problem of locating m discretionary service facilities to intercept the maximum potential customer flow. The authors develop a mathematical model and algorithm that determine optimal facility locations and compute the minimal number needed to capture a specified fraction of total customer flow. Computational experiments demonstrate the effectiveness of the proposed method.

Abstract

Automatic teller machines and gasoline service stations are two examples of a growing number of “discretionary service facilities.” In consuming service from these facilities, a significant fraction of customers do so on an otherwise preplanned trip (e.g., on the daily commute to and from work). A system planner, in determining the best locations of such facilities, is more concerned with placing the facilities along paths of customer flow rather than, say, near the center of a cluster of residences or work places. We formally model this problem and present a method for determining the optimal locations of m discretionary service facilities so as to intercept the maximum possible potential customer flow. We also show how to determine the minimal number of facilities required to intercept a prespecified fraction of total customer flow. Computational results are included.