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A Threshold‐Satisfying Competitive Location Model
Author(s) -
Drezner Tammy,
Drezner Zvi,
Shiode Shogo
Publication year - 2002
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/1467-9787.00259
Subject(s) - revenue , location model , threshold model , distribution (mathematics) , probability distribution , falling (accident) , probability model , market share , computer science , mathematical optimization , econometrics , operations research , economics , mathematics , statistics , finance , medicine , mathematical analysis , environmental health
In this paper we consider a location model based on the threshold concept. We find the best location such that the probability of revenue falling short of the threshold is minimized. This objective is appropriate when a firm will not survive if its revenue falls below a known threshold. A new store is to be located. Demand is not deterministic but rather has a statistical distribution. We seek the location at which the probability that the revenue (expressed as market share attracted by the new store) is below a given threshold is minimized. The model is formulated and solved, and computational results are given.