ALLOCATION OF DEMAND WHEN COST IS DEMAND-DEPENDENT

This paper extends the location-allocation model with continuously dis tributed demands by making the cost charged to users by a facility a f unction of the total number of users patronizing the facility. Users s elect their facility based on facility charges and transportation cost s. We explore equilibria where each customer selects the least expensi ve facility (cost and transportation). One special case where faciliti es and customers are located on a finite line segment is discussed in a previous paper. In this paper we analyze the problem of multiple fac ilities and a convex region of demand. Algorithms to solve it are devi sed and computational experiments reported. The case of two facilities serving customers uniformly distributed on a square is solved in deta il. (C) 1998 Elsevier Science Ltd. All rights reserved.