Multi-Objective Location Problem for Bank Branches

Abstract

Although current technologies allow simple online banking transactions, it is vital to guarantee access to bank branches both for customers and businesses. Banking branch interactions improve trust in bank institutions in everyday situations and emergencies. This research addresses the problem of the location of banking facilities. A set of objective functions related to socio-economic variables, geographical coverage and bankers preferences are considered. A multi-objective linear programming model is proposed to solve different versions of the problem considering a maximum radial distance coverage. The (mono/bi/multi) objective versions of the problem are analyzed by varying the values of the weights of objective functions in the proposed model that is then solved using AMPL Gurobi solver. The case study is carried out in Santiago de Chile with data from a local banking institution. In the results, the bank’s initial situation is analyzed to contrast the solutions found later. This analysis is performed considering the mono-objective, bi-objective, and multi-objective nature of the studied problem. In all these cases, we analyzed changes in the structure of solutions as the coverage of the branches increases. The proposed model can quickly obtain feasible solutions according to the needs and available resources, allowing to replicate the analysis in different institutions under similar conditions considering strategically established priorities.

Keywords

• Bank location
• service coverage
• optimization model
• objective function
• AMPL Gurobi solver
• COVID-19