Location and operations management of companies providing new type of services

Abstract

With the development of the economy and the expansion of market capacity, companies that launching new types of the services need to conduct enterprise location in the newly developed market to serve the customers. In order to maximize the profit, companies should balance the rent and the customer flow volume, as well as service income and customers' waiting cost, which means that the companies should choose right places to provide service. When there are some competitors, optimal service rate should be set to keep the customers staying at the company to get service. In this paper, we use queuing theory to study location problem. A location model with changing arrival rate and an operation model with changing service rate are built. We characterize the optimal policies and discuss the impact of the parameters on the optimal policies. Numerical experiments are conducted to discuss the impact of the customers' patience to the optimal service rate.