Competitive Facility Location with Selfish Users and Queues

In a competitive environment, we consider the problem faced by a service firm that makes decisions with respect to both the location and service levels of its facilities, taking into account that users patronize the facility that maximizes their individual utility, expressed as the sum of travel time, queueing delay, and a random term. This situation can be modelled as a bilevel program that involves discrete and continuous variables as well as linear and nonlinear (convex and nonconvex) functions. We design for its solution an algorithm based on piecewise linear approximation as well as a matheuristic that exploits the very structure of the problem.

The online appendix is available at https://doi.org/10.1287/opre.2018.1781.