Extensions to Competitive Facility Location with Multi-purpose Trips

Abstract

Existing location models considering multi-purpose shopping behavior limit the number of stops a customer makes to two. We introduce the multi-purpose (MP) competitive facility location model with more than two stops. We locate one or more facilities in a competitive environment, assuming a shopper may stop multiple times during one trip to purchase different complementary goods or services. We show that when some or all trips are multi-purpose, our model captures at least as much market share as the MP models with fewer purposes. Our extensive simulation experiments show that the MP models work best when multiple new facilities are added. As the number of facilities increases, however, the returns diminish due to cannibalization. Also, with significant increases in complexity for each additional stop added, expanding the model beyond three purposes may not be practical.