<p>In today’s dynamic and highly competitive market environment, enhancing enterprise resilience has become increasingly critical, imperative and strategic. In this work, we examine a novel approach to resilient retail facility planning, focusing on the strategic location and quality design of retailer facilities. It involves the optimal placement of multiple retail facilities and design of their service quality for a new entrant enterprise by considering the anticipated reactions of existing competitors and the service radius of the facilities. The objective is to maximize the entrant enterprise’s net profit while taking into account the existing competitors’ reactions reflected by improving their facilities’ service quality. For this problem, we first adapt a multiplicative interaction model to analyze the market share captured by each facility. We then use a Stackelberg game to model the competitive decision-making process between the new entrant company and its competitor. Based on this, we formulate the problem into a mixed-integer nonlinear programming model. To solve it, we first develop a tailored Branch &amp; Bound-based exact algorithm. Given the high complexity of the problem, we further develop a problem-specific improved genetic algorithm to solve large-scale instances. The effectiveness and efficiency of the proposed algorithms are confirmed by numerical experimental results from both a real case and randomly generated instances. Our findings indicate that (i) Adopting proactive strategies can empower the supply chain to effectively counteract competitors’ reactions; (ii) Considering the limited service radius can assist practitioners in achieving a trade-off between enhancing service quality and increasing the number of facilities, thereby minimizing invalid losses; and (iii) In a competitive market, an increase in budgets does not always lead to an improvement in net profits.</p>

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Resilient retailer facility planning: optimizing location and service quality amidst competitors’ reactions

  • Peng Wu,
  • Shanxing Li,
  • Xinyi Zhang,
  • Liping You

摘要

In today’s dynamic and highly competitive market environment, enhancing enterprise resilience has become increasingly critical, imperative and strategic. In this work, we examine a novel approach to resilient retail facility planning, focusing on the strategic location and quality design of retailer facilities. It involves the optimal placement of multiple retail facilities and design of their service quality for a new entrant enterprise by considering the anticipated reactions of existing competitors and the service radius of the facilities. The objective is to maximize the entrant enterprise’s net profit while taking into account the existing competitors’ reactions reflected by improving their facilities’ service quality. For this problem, we first adapt a multiplicative interaction model to analyze the market share captured by each facility. We then use a Stackelberg game to model the competitive decision-making process between the new entrant company and its competitor. Based on this, we formulate the problem into a mixed-integer nonlinear programming model. To solve it, we first develop a tailored Branch & Bound-based exact algorithm. Given the high complexity of the problem, we further develop a problem-specific improved genetic algorithm to solve large-scale instances. The effectiveness and efficiency of the proposed algorithms are confirmed by numerical experimental results from both a real case and randomly generated instances. Our findings indicate that (i) Adopting proactive strategies can empower the supply chain to effectively counteract competitors’ reactions; (ii) Considering the limited service radius can assist practitioners in achieving a trade-off between enhancing service quality and increasing the number of facilities, thereby minimizing invalid losses; and (iii) In a competitive market, an increase in budgets does not always lead to an improvement in net profits.