6 Pages Posted: 13 Jan 2012
Date Written: February 2012
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: 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
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