A synthesis of aggregation methods for multifacility location problems: Strategies for containing error

When solving a location problem using aggregated units to represent demand, it is well known that the process of aggregation introduces error. Researc h has focussed on individual components of error, with little work on ident ifying and controlling total error. We provide a focussed review of some of this literature and suggest a strategy for controlling total error. Consid eration of alternative criteria for evaluating aggregation schemes shows th at the method selected should be compatible with the objectives of the anal yses in which it is used. Experiments are described that show that two diff erent measures of error are related in a nonlinear way to the number of agg regate demand points (q), for any value of the number of facilities (p). We focus on the parameter q/p and show that it is critical or determining the expected severity of the error. Many practical implementations of location algorithms operate within the range of q/p where the rate of change of err or with respect to q/p is highest.