Customer Allocation in Maximum Capture Problems

The maximum capture (MAXCAP) model and its variants have been

widely used to find the maximum capture that a firm can get as it enters a spatial

market where there are already existing (competitor’s) facilities. While the model

obtains the optimal demand capture, it however allows the customers to be assigned

to the non-closest facility which may incur additional operating costs. A two stage

method can be used that overcomes the drawback of the original model while

requiring a negligible extra computational effort. To make the original model mathematically

self contained and more concise two revised formulations of the problem

RMAXCAP-1 and RMAXCAP-2 are proposed which assure that the customers

patronize only their closest entering facilities. These models are tested on different

sizes of datasets and their performances are compared.