A Tabu Search Algorithm for Multi-Period Bank Branch Location Problem: A Case Study in a Turkish Bank

Document Type: Article

Authors

1 stanbul Technical University, Industrial Engineering Department, Macka Campus 34357, Istanbul, Turkey

2 Istanbul Technical University, Industrial Engineering Department, Macka Campus 34357, Istanbul, Turkey

Abstract

Banks need to open new branches in new sites as a result of increase in the population, individual earnings and the growth in national economy. In this respect, opening new branches or reorganizing the locations of current branches is an important decision problem for banks to accomplish their strategic objectives. This paper presents a decision support method for multi-period bank branch location problems. Our aim is to find bank branch location based on transaction volume, distance between branches, and cost of opening and closing branches. The proposed method not only develops an Integer Program and a Tabu Search algorithm to find the exact places of branches but also presents a structuring method to identify the related criteria and their importance. We demonstrate the effectiveness of the method on random data. In the final stage, the method is applied in a Turkish bank’s branch location problem considering the current and possible places of the branches, availability of the data, and the bank’s strategies for a four-year strategic planning.

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