Locating shared production facilities on a network

Eric David Kosiba, Purdue University

Abstract

Contemporary facilities location research has served to develop models that more genuinely represent spatial decision making. One problem that has received little attention is the optimal location decisions of clubs or consumer managed firms--associations of individuals who derive mutual benefit from sharing (e.g. production cost sharing given economies of scale). Most facilities location research assumes a single decision maker; the club facilities location problems discussed in this research assume that decision makers are the consumers of the good. The research examines two general problems. First, mathematical models are developed to aid decision makers (consumers) determine the best (minimum cost) cooperative strategy (location and membership) given significant economies of scale, significant transport costs, and a uniform delivered pricing policy. These models are shown to be solvable using a greedy algorithm. Both elastic and inelastic consumer demands are considered. The second problem examined stems from a club/cooperative game perspective. That is, what is the "likely" cooperative strategy resulting when each consumer maximizes individual benefit. This problem is formulated as a cooperative game, and a procedure is offered to determine the partition of the population corresponding to such "rational" consumer behavior.

Degree

Ph.D.

Advisors

Sparrow, Purdue University.

Subject Area

Operations research|Civil engineering|Systems design

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