Distance Decay Sensitivity Criterion in Facility Location Problems Under Global Distance Optimization and Facility Attractiveness Strategy.

Abstract

Abstract

Facility location under global distance minimization requires that the optimal values of the facility coordinates be determined such that the entire distance between the facility and its demand points within the service domain is minimized. Since this is an issue where it is assumed that the closer a facility is to its demand points, the higher its patronage, it excludes the possibility of a potential customer overlooking the distance effect and patronizing a faraway facility due to some attractive attributes of such a distance facility. In this study, optimal facility location is done using the gravity method of the minimization of a Euclidean straight line distance function. A distance decay sensitivity parameter is determined through a linear regression modelling of customer’s patronage from an assigned customer’s population pool, alongside facility attractiveness modelling. It is found that substantial differences arise in possible decisions of an investor with respect to profit maximization, as it relates with the global distance minimization and the attractiveness strategy. For the global distance optimization approach, the entire weighted distance between the facility and the demand points in the numerical validation is reduced from 1,394.0km to 1,220km, a difference of 174km. an investor thus assumes that this distance cut will be compensated for with high patronage. Nevertheless, the determined distance decay factor of 0.1, shows that the decision of any demand point to patronize the located facility, is not significantly distance based. This position is further reaffirmed by the result of the attractiveness analysis, as the shortest weighted distance between one of the demand points (84.853km) was second in the attractiveness rating. (2572), behind (25.756km) of a weighted distance of (273.004km). The demand point with weighted distance of (834.444km) from the facility had a higher attractiveness rating of (2563) than the demand point with a weighted distance of (201.246km) with an attractiveness rating of (1,240).