Environmental effects in an integrated hub location and pricing problem

Document Type: Article

Authors

Department of Industrial Engineering, University of Bojnord, Bojnord, Iran

Abstract

The product pricing decision is one of the important factors in the profitability of organizations, which has a key role in their survival. Moreover, the pricing is determined based on the demand and location of applicants. Therefore, the location of facilities and services influence the pricing. Also, the location problem is a critical issue in the survival of the organization. Furthermore, the hub location problem is a type of location problems, which has many applications and saves time and money. On the other hand, location is impossible without considering transportation and transportation has many negative effects on environmental, such as greenhouse gas emissions, air pollution, noise, etc. Considering this reason, it is important to consider the environmental costs to reduce the adverse effects. In this paper, we consider integrated pricing and hub location problem with environmental costs in the competitive market that customer choice is calculated according to the logit model (LM). We use a genetic algorithm (GA) to solve and observe the environmental cost, entrant profit, incumbent income, the impact of customer sensitivity and discount between hubs on the entrant profit. As a final point, the computational experiments demonstrate that the suggested GA is both efficient and effective.

Keywords