A double VNS heuristic for the facility location and pricing problem

In this paper we present the problem of decision making on the facility location and pricing. We assume that the facilities can charge the different prices and the objective is to maximize the overall revenue. It is known that the problem is NP-hard in the strong sense even for the given facility location. A two level local search heuristic based on the VNS framework is developed for this nonlinear problem. To evaluate the global maximum, we reformulate the problem as a mixed integer linear program with additional constraints and variables. Computational results for randomly generated test instances are discussed.