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A Hierarchical Location Model for Locating Bank Branches in a Competitive Environment
Author(s) -
Miliotis P.,
Dimopoulou M.,
Giannikos I.
Publication year - 2002
Publication title -
international transactions in operational research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.032
H-Index - 52
eISSN - 1475-3995
pISSN - 0969-6016
DOI - 10.1111/1475-3995.00373
Subject(s) - competition (biology) , context (archaeology) , computer science , service (business) , location model , business , operations research , industrial organization , marketing , geography , ecology , archaeology , engineering , biology
Recent developments in the provision of banking services are expected to affect the structure and the organization of modern banks significantly. Consequently, it has become necessary for most banks to reorganize their service network. In this context we demonstrate how demand–covering models may be combined with geographical information systems (GIS) to determine the optimal location of bank branches, taking into account the various factors that characterize local conditions within the demand area. The essence of the proposed models is to employ a GIS to represent various criteria concerning the demand for banking services (geographical, social, economic, etc.) as well as the competition in each particular area. This information is then taken into account by appropriate demand–covering models which determine the locations that achieve the maximum capture of the demand. Finally, we present some initial results concerning the application of this approach by a major Greek commercial bank.