Introduction

A large part of planning problems which ask for firms’ location and pricing decisions occurs in a situation in which there exist other facilities providing the same or homogonous service or product. In the relevant models, planner aims to devise the better alternatives for a firm competing for customers’ purchasing power with other firms. For example, the problem of locating shop centers, banks, ATMs, super-markets and restaurants could be modeled using this paradigm [1]. This problem known as competitive facility location model maximizes market share, revenue or profit.

Prior to coming to a decision using the model, it is re-quired to determine how customers behave or how they decide to choose a facility and furthermore what is their expected expenditure.

There are two main categories on retail facilities choi- ce models: descriptive-determinist approach and explica-tive-stochastic approach. Descriptive approaches are based on observation. They rely on unreal assumptions such as customers choose the closest facility. Most classic location problems such as p-median [2] and MCLP [3] are often formulated based on this assumption. Hotelling [4] was the first on study-ing a competitive location planning model using a de-scriptive approach. MAXCAP [5] is a well known com-petitive location problem based on this approach.

Cus-tomers’ purchasing power is distributed among different facilities according to a deterministic or zero-one ap-proach which is called also full capture [6]. In this case, the whole demand of a customer is captured by a facility which is the best for him/her according to a utility func-tion. Conventionally, the utility function is defined based on only distance or travelling time. This is true when differences between facilities are negligible, or in areas where shopping opportunities are few and transportation is difficult [7]. In many cases however, facilities are mul-tiform, i.e., they do differ in other aspects than the mere site where they are located, and customers will take these differences into account in the way they feel attracted to them [8].