Stochastic Components of the Attraction Function in Competitive Facilities Location

In this chapter, we briefly review basic competitive facilities location models and discuss many extensions that have a stochastic component. Examples include the minimax regret objective, the probability of not meeting a threshold, and the leader-follower game. The most widely used user choice rule is the one applied in the probabilistic gravity model also referred to as the Huff model. There are p facilities located in the area. The probability that a customer selects a particular facility to patronize is a function of all facilities’ attractiveness levels and travel distances. We discuss the assessment of the attractiveness level of competing facilities which is based on stochastic analysis. We also present other non-competitive location models that apply the gravity rule in the formulation of their model.