TY - JOUR

T1 - Designing a Service System with Price- and Distance-Sensitive Demand

T2 - A case study in mining industry

AU - Hoseinpour, Pooya

AU - Marand, Ata Jalili

N1 - Publisher Copyright: © 2022 Elsevier B.V.

PY - 2022/12

Y1 - 2022/12

N2 - This study incorporates pricing decision into a congested facility location problem with immobile servers. The operations of facilities are modelled as queueing systems with price- and distance-sensitive streams of customer arrivals. Given a set of potential locations, a central service provider decides on the location of facilities, the allocation of customers to open facilities and also the service rate and price at each facility. The service provider’s profit maximization problem is investigated in two settings, i.e., continuous and discrete service rates, each representing a class of real-world problems. In either case, the resulting mixed-integer non-linear program is reformulated as a mixed-integer second-order cone program which enables us to solve it in a reasonable time using commercial software packages. To demonstrate the applicability of the proposed models, a real-world case in the mining industry is presented and solved.

AB - This study incorporates pricing decision into a congested facility location problem with immobile servers. The operations of facilities are modelled as queueing systems with price- and distance-sensitive streams of customer arrivals. Given a set of potential locations, a central service provider decides on the location of facilities, the allocation of customers to open facilities and also the service rate and price at each facility. The service provider’s profit maximization problem is investigated in two settings, i.e., continuous and discrete service rates, each representing a class of real-world problems. In either case, the resulting mixed-integer non-linear program is reformulated as a mixed-integer second-order cone program which enables us to solve it in a reasonable time using commercial software packages. To demonstrate the applicability of the proposed models, a real-world case in the mining industry is presented and solved.

KW - OR in service industries

KW - Pricing

KW - Queueing

KW - Service system design

KW - Mixed-integer second-order cone programming

KW - Integer nonlinear programming

UR - https://www.sciencedirect.com/science/article/pii/S0377221722002569

U2 - 10.1016/j.ejor.2022.03.032

DO - 10.1016/j.ejor.2022.03.032

M3 - Journal article

VL - 303

SP - 1355

EP - 1371

JO - European Journal of Operational Research

JF - European Journal of Operational Research

SN - 0377-2217

IS - 3

ER -