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Journal articles (2018), European Journal of Operational Research, 266 (1), pp. 46-56

Outer Approximation and Submodular Cuts for Maximum Capture Facility Location Problems with Random Utilities

LJUBIC Ivana , MORENO E.

We consider a family of competitive facility location problems in which a “newcomer” company enters the market and has to decide where to locate a set of new facilities so as to maximize its market share. The multinomial logit model is used to estimate the captured customer demand. We propose a first branch-and-cut approach for this family of difficult mixed-integer non-linear problems. Our approach combines two types of cutting planes that exploit particular properties of the objective function: the first one are the outer-approximation cuts and the second one are the submodular cuts.The approach is computationally evaluated on three datasets from the recent literature. The obtained results show that our new branch-and-cut drastically outperforms state-of-the-art exact approaches, both in terms of the computing times, and in terms of the number of instances solved to optimality.

LJUBIC, I. and MORENO, E. (2018). Outer Approximation and Submodular Cuts for Maximum Capture Facility Location Problems with Random Utilities. European Journal of Operational Research, 266(1), pp. 46-56.