Variable Neighborhood Search Algorithms for a Competitive Location Problem with Elastic Demand

Abstract: Under consideration is the situation in a competitive market when a new Company plansto make profit from opening its own facilities that offer goods or services. The Company have totake it into account that there are several projects for opening each facility, and similar facilities ofthe Competitor are already placed on the market. Moreover, customers themselves choose theplaces to meet their demand in dependence on where and which facilities are located. TheCompany’s goal is to choose locations and projects for opening new facilities in order to attractthe largest share of all customer demand. The special type of demand leads to nonlinearity of theobjective function and to additional difficulties in finding an optimal solution. In this article weconstruct some variants of variable neighborhood search algorithms, perform their experimentalanalysis by using the upper estimates, obtain a posteriori accuracy estimates, and discuss theresults. © 2020, Pleiades Publishing, Ltd.