FACILITY LOCATION UNDER ZONE PRICING

Zone pricing consists in determining simultaneously several delivered prices together with the zones where these prices apply. A model and a lgorithm are proposed to determine optimal facility locations, prices, tariff-zones, and market areas in order to maximize the firm's profit under zone pricing. The resulting nonlinear mixed-integer program is tackled by projecting the objective function on the price space, solvi ng repeatedly uncapacitated facility location problems for fixed value s of the prices. The implicit profit function so defined is optimized by branch-and-bound. Computational results are reported.