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Modelling Lost Demand in Competitive Facility Location

6 Pages Posted: 13 Jan 2012  

T. Drezner

California State University, Fullerton - Mihaylo College of Business & Economics

Z. Drezner

California State University, Fullerton - Mihaylo College of Business & Economics

Date Written: February 2012

Abstract

In this paper, we propose a simple new approach to model lost demand (also referred to as elastic demand) in competitive facility location. A ‘dummy’ competing facility that attracts the lost demand is added to the list of competing facilities. All competitive facility location models, regardless of their complexity or assumptions, can be modified to include lost demand and be solved by the same algorithms designed for standard models once the dummy facility is added to the data as an additional competitor.

Suggested Citation

Drezner, T. and Drezner, Z., Modelling Lost Demand in Competitive Facility Location (February 2012). Journal of the Operational Research Society, Vol. 63, Issue 2, pp. 201-206, 2012. Available at SSRN: https://ssrn.com/abstract=1983830 or http://dx.doi.org/10.1057/jors.2011.10

Tammy Drezner (Contact Author)

California State University, Fullerton - Mihaylo College of Business & Economics ( email )

P.O. Box 6848
Fullerton, CA CA 92834-6848
United States

Zvi Drezner

California State University, Fullerton - Mihaylo College of Business & Economics ( email )

P.O. Box 6848
Fullerton, CA CA 92834-6848
United States

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