A Threshold-Satisfying Competitive Location Model

In this paper we consider a location model based on the threshold concept. We find the best location such that the probability of revenue falling short of the threshold is minimized. This objective is appropriate when a firm will not survive if its revenue falls below a known threshold. A new store is to be located. Demand is not deterministic but rather has a statistical distribution. We seek the location at which the probability that the revenue (expressed as market share attracted by the new store) is below a given threshold is minimized. The model is formulated and solved, and computational results are given. Copyright 2002 Blackwell Publishers Inc.