Location-pricing model for distribution systems

This paper considers the relationship between pricing and location decisions for a monopolistic firm facing a known demand function which dependent to price charged in facility and distance from facility. Developed mixed-integer non-linear programming formulations for determining optimal prices and locations. A hybrid algorithm is developed as a solution method including a tabu search algorithm for determining distribution centers location and an exact solution for determining pricing and inventory in each distribution center. Algorithm performance is compared against GAMSoptimization solver and exact method.

Keywords:

Pricing , Location , Tabu search , Demand