A bi-objective plant location problem: cost vs. demand served

The standard plant location problem requires choosing from a set of potential sites the locations of new facilities in order to serve all the demands specified on a network at a minimum total cost. In this paper, the standard model is replaced by a new model in which the acceptance of demands onto the location balance sheet becomes part of the decision process. The motivation for such an approach and its applicability in the decision process are elaborated. The mathematical formulation results in a bi-criterion model which can be used to study the trade-off between total cost and the proportion of the market to be served. Computational and theoretical results are reported which demonstrate the integer friendliness of the new model.