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Designing a Service System with Price- and Distance-Sensitive Demand: A case study in mining industry

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  • Pooya Hoseinpour, Amirkabir University of Technology, Iran, Islamic Republic of
  • Ata Jalili Marand
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.
Original languageEnglish
JournalEuropean Journal of Operational Research
Pages (from-to)1355-1371
Number of pages17
Publication statusPublished - Dec 2022

Bibliographical note

Publisher Copyright:
© 2022 Elsevier B.V.

    Research areas

  • OR in service industries, Pricing, Queueing, Service system design, Mixed-integer second-order cone programming, Integer nonlinear programming

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