The Use of Random-Utility Theory in Building Location-Allocation Models

Leonardi, G. (1981). The Use of Random-Utility Theory in Building Location-Allocation Models. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-81-028

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The most important part of a location-allocation model is the allocation rule, that is, the way clients are assigned to facilities. In the well-known models of the "plant-location" family, the embedded allocation rule is the assignment of the least-travel-cost facility,

This allocation rule depends on the assumption that the cost, or more generally utility, associated with each possible facility choice is deterministically known. The simplest way to generalize a plant-location model is to add a random term to travel costs, with a known probability distribution. Such randomness may be shown to arise in many real-life situations, and the resulting choice models constitute the subject of random-utility theory,

This paper introduces the use of the random-utility modeling philosophy in location-allocation problems, Some relevant properties of the resulting family of models are derived, Among them, of special importance is the submodularity property, which relates the random-utility-based location models to a recent area of research in combinatorial optimization. Submodularity is exploited to develop simple heuristic algorithms, and the effectiveness of the approach is supported with some numerical results.

Item Type: Monograph (IIASA Working Paper)
Research Programs: Human Settlements and Services Area (HSS)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 01:50
Last Modified: 27 Aug 2021 17:10

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