Location-Allocation Decisions in Collaborative Networks of Service Enterprises

This paper presents a collaborative mechanism for optimizing the location-allocation decisions associated with networked service enterprises. The decisions are made simultaneously at three levels, of strategic, tactical, and operational. The strategic decisions deal with the optimal location of a set of regional headquarters (RHQ), as service providers, in a set of potential locations, and at a tactical level, the regional subsidiaries (RSS), as service consumers, are allocated to the RHQs. Due to the fact that a portion of services can be provided remotely, the corresponding tasks are divided into physical (p-Task) and electronic (e-Task) tasks. The operational level of decisions then deal with lateral collaboration of RHQs, where RHQs facing capacity shortage share a portion of their e-Tasks with RHQs that have excess capacities, such that (1) the task fulfillment rates, and (2) the resource utilization are maximized. A bi-objective mixed integer programming (BOMIP) is developed for simultaneous optimization of all strategic, tactical, and operational decisions. Numerical experiments indicate significant improvements in the service level (27% on average) and resource utilization (36% on average) made by solving the proposed collaborative location-allocation problem (CLAP), compared to conventional non-collaborative approaches.