Optimization of competitive facility location for chain stores

The location affects the competitiveness and market share of a new entry enterprise, especially for a retail enterprise. This study focuses on the competitive location of new chain stores. In this paper, a bi-level model is proposed to formulate the competitive location problem. And the model also considers the pricing game between the new entry enterprise and the existing competitor. The model optimizes the location by maximizing the benefit on the principle of the Nash equilibrium. A heuristic algorithm is proposed to solve the model. Results show the feasibility of the proposed model and provide managerial insights for decision makers to determine an appropriate location.