AGGREGATION ERROR BOUNDS FOR A CLASS OF LOCATION

MODELS
R. L. FRANCIS
Department of Industrial and Systems Engineering, University of Florida, Gainesville, Florida 32611; francis@ise.ufl.edu

T. J. LOWE
College of Business Administration, University of Iowa, Iowa City, Iowa 52242, timothy-lowe@uiowa.edu

ARIE TAMIR
Department of Statistics & Operations Research, School of Mathematical Sciences, Tel-Aviv University, Tel-Aviv 69978, Israel, atamir@math.tau.ac.il
(Received February 1997; revisions received January 1998, November 1998; accepted December 1998)

Many location models involve distances and demand points in their objective function. In urban contexts, there can be millions of
demand points. This leads to demand point aggregation, which produces error. We identify a general model structure that includes
most such location models, and present a means of obtaining error bounds for all models with this structure. The error bounds
suggest how to do the demand point aggregation so as to keep the error small.

W hen solving real-world, large-scale location prob-

lems, it is quite common to aggregate demand
points. This aggregation amounts to intentionally reducing
the accuracy of the model to make it more computation-
ally tractable. It is the purpose of this paper to develop
worst-case error estimates for such aggregation, which in
turn suggest means of doing demand point aggregation so
as to help control the resulting error. We believe that our
approach can facilitate an analysis of the trade-off between
model accuracy and computational tractability.
Location problems occur whenever some private or pub-
lic sector organization is faced with a logistics problem
involving locating facilities to provide services to custom-
ers. Providing good service is essential, and the conve-
nience, which is usually measured by either travel distance
or travel time between the facilities and the customers, is
an important measure of good service. The field of loca-
tion theory, as a research area, has been very active for a
number of years. As an example of the diversity of location
models studied, see Mirchandani and Francis (1990).
Many types of location models have been formulated and
analyzed. One reason for the widespread study of these
problems is that they arise frequently in practice. A reason
they have drawn interest from the research community is
that they are often extremely difficult to solve to optimality.
In fact, many of the location problems are NP-hard, so re-
search effort has been expended toward the development of
heuristic solution methods for general models as well as tai-
lored solution approaches for special cases of the models.
In many applied location contexts, customers can num-
ber in millions. For example, modeling the public sector
decision of determining the location of emergency services
in a large metropolitan area could involve a problem of
this scale if customers are modeled at the “street address”
level. This very large number of customers makes the loca-
tion problem difficult to deal with, and for computational
purposes it is quite common in such situations to aggregate
the customers. For example, if there are 100 homes in a
city block, they might be aggregated into (replaced by, for
modeling purposes) a single imaginary home at the middle
of the block. Such an aggregation approach simplifies the
location problem computationally but introduces error, be-
cause the “true” model has been replaced by an approxi-
mating model.
There are other reasons besides computational ones for
doing aggregation of customer data. Francis et al. (1999)
point out that information on individuals requiring a service
is sometimes regarded as confidential. Privacy considerations
lead individuals to expect information that would identify
them not be released and made publicly available. In fact, it is
for this reason that the National Census releases to the public
only information on aggregations of individuals.
Also we note that in many instances there could be a
high degree of uncertainty (as measured by the coefficient
of variation) regarding a single given customer’s demand
for services. However, when many such customers are ag-
gregated, the problem of predicting total demand becomes
much easier. For example, it is much easier to predict with
a given level of confidence that over an aggregated set of
customers the total demand for services will be “D units”
per time period than it is to predict the demand rate from
any single customer. This advantage of aggregation is often
referred to as “risk pooling,” and has found extensive ap-
plications in inventory and distribution settings (see, for
example, Lee et al. 1993, Kumar et al. 1995).

Subject classifications: Facilities Location: demand point aggregation error.

Area of review: SERVICES & MILITARY.

Operations Research, 䉷 2000 INFORMS 0030-364X/00/4802-0294 $05.00

Vol. 48, No. 2, March–April 2000, pp. 294 –307 294 1526-5463 electronic ISSN

Although aggregation/approximation is pervasive in ap-
plied location work when there are many customers, aggre-
gation is often done on a rather ad-hoc basis, at least from
the standpoint of minimizing the error associated with the
aggregation process. We note that pre-existing aggrega-
tions of geographical data are readily available. For exam-
ple, one can obtain household data on an aggregated basis
in terms of city blocks, postal zip codes, tracts, etc. In fact,
aggregation of customer facilities by replacement with cen-
troids of groups of customers is quite common. Such ag-
gregation schemes may seem reasonable to the layperson,
but they ignore the issue of aggregation error.
Rushton (1989), in an insightful discussion of applica-
tions of location models, discusses aggregation. He states:
“The effect of employing discrete spatial structures to rep-
resent data that is distributed continuously is largely un-
known, though recent research has shown that the effects
on the validity of results from location-allocation models
can be considerable. In most cases, the decision to use a
particular data structure is a matter of convenience and
most analysts do not discuss the potential consequences of
the data system they use or the alternative they reject. . . .
Clearly, optimum locations must be sensitive, to an impor-
tant degree, at some level of spatial aggregation of
data. . . . As for capturing geographical complexity, the his-
tory of applications show little development: decisions to
use crude distance functions and spatially aggregated data
units continue to be the rule and the lack of any recog-
nized method for evaluating the consequences of these
choices on the quality of the results has encouraged ana-
lysts to simply dismiss the problem as intractable.”
We now briefly discuss some other selected aggregation
literature. Goodchild (1979) discusses aggregation effects
on both median and minimax type models. Murray and
Gottsegen (1997) study the effects of aggregation on loca-
tion model solutions. Mirchandani and Reilly (1986) exam-
ine the effect of using point nodes to approximate “spatial
nodes.” Daskin et al. (1989) study aggregation effects in
covering problems. Hillsman and Rhoda (1978) identify
three sources of aggregation error, and error measurement
is studied by Casillas (1987). Techniques for correcting
different types of error are proposed by Current and
Schilling (1987, 1990) and Hodgson and Neuman (1993).
For a more detailed accounting of published work on
n-median model aggregation, see Erkut and Bozkaya
(1999).
Many of the aggregation studies have been experimental
in nature. Aggregations have been simulated over gener-
ated data sets, and estimates have been evaluated after the
aggregation has been implemented. With few exceptions,
e.g., Current and Schilling (1987, 1990) and Plastria
(1996), aggregation procedures are generally not devel-
oped with the objective of minimizing aggregation error.
However, aggregation schemes that attempt to reduce an
upper bound on aggregation error have recently been de-
veloped for two specific location problem settings. Perhaps
the two most important location models in the literature
FRANCIS, LOWE, AND TAMIR / 295
are the n-median and the n-center models, introduced by
Hakimi (1964, 1965). Francis et al. (1996) consider the
n-median problem where customers are distributed over
the planar location space, and the travel distance is mea-
sured with the rectilinear norm. Rayco et al. (1997) con-
sider the n-center problem, again in the context of
customers distributed in the plane, and the rectilinear
norm. In both of these papers, an upper bound (in the
form of an error bound function) is developed using an
approach first reported in Francis and Lowe (1992) and
then used to drive an aggregation scheme. That is, the
method of doing aggregation is driven by the desire to
minimize the error associated with aggregating customer
data.
In this paper, we generalize and extend many of the
results in Francis et al. (1996) and Rayco et al. (1997). Our
purpose herein is to report error bounds for an entire class
of location models. Note that our focus is not on solving
the original (reported) location problem, but instead is to
develop an error bound (function) that can potentially be
used to develop good data aggregation schemes for the
problem.
1. MODEL INTRODUCTION
We now develop notation that we shall use in the remain-
der of our paper. We let P ⫽ ( p1, . . . , pm) represent the
vector of m customer locations (with pi the location of
customer i), and X ⫽ ( x1, . . . , xn) represent the set of n
locations (to be determined) of the new facilities (with xj
the location of facility j). Whenever a fixed number of new
facilities is to be located, we assume that the number of
such facilities is n. Note that the location context is quite
general, i.e., we are not restricted to the case where cus-
tomers are located (and the new facilities are to be lo-
cated) in the plane or on a transport network, etc.
For location problems, the notion of distance is para-
mount. Given two locations, say u and v, we denote by
d(u, v) the distance between the two points. We assume
the distance has the following (metric space) properties:
(1) d(u, v) ⫽ d(v, u) for all u and v (symmetry);
(2) d( x, y) 聿 d( x, z) ⫹ d( z, y) for all x, y, z (triangle
inequality); (3) d(u, v) 肁 0 for all u and v, with d(u, v) ⫽
0 meaning u ⫽ v (positivity). As is usually the case, if the
location problem is posed on an undirected transport net-
work, then d⵺ is the shortest path distance. If the location
problem is posed in the plane, then d⵺ is some relevant
distance defined by a norm.
Given a location u and a vector (or a finite set) X of
locations, we denote by D(X, u) the distance from u to the
closest component (member) of X. Often, we will be deal-
ing with objective functions that involve sums and/or max-
ima of (nonnegative) weighted distances. The weights
reflect the relative importance of various terms in the lo-
cation problem objective function. We will reserve the
symbol wij for the weight associated with distance between
296 / FRANCIS, LOWE, AND TAMIR
new facility j and customer i, and vjk will be used to weight
the distance between new facilities j and k.
We let f(X:P) represent an original location model, i.e.,
the underlying location model of interest. The modifier
“original” is important because, via the process of aggrega-
tion, we derive an approximate location model. The ap-
proximate model arises as follows. Via aggregation, the
vector P is replaced by an (aggregate) vector P⬘, whose
elements are taken from a collection Q of distinct aggre-
gate demand points. The number of elements, q, in Q is
significantly less than m, the number of elements in P. The
approximate location model is denoted by f(X:P⬘).
The following discussion is taken from Francis et al.
(1999).
If p⬘i replaces pi, we customarily say that pi is aggregated into
p⬘i. Often the rule used is to replace pi by a closest member of
Q to pi. Another possible rule derives from using some par-
tition of the demand points into q disjoint and exhaustive
sets. Then an aggregate demand point for each set is chosen
and it replaces every demand point in the set. For example,
demand points might be partitioned according to the postal
code area (PCA) they are in; every demand point in each
PCA might be replaced by the centroid of the PCA (Domich
et al. 1991). Thus, to obtain an aggregation we must decide
on three things:
(D1): q, the number of aggregate demand points,
(D2): the locations of the aggregate demand points,
(D3): the replacement rule.
In principle, one could imagine an approach which deter-
mines (D2) and (D3) simultaneously instead of sequentially,
but we do not know of one. The freedom of choice in the
three decisions, D1, D2, D3 allows numerous aggregation
schemes. There are many ways in geography of partitioning
demand points, including tiling, space filling curves, and
voter districting methods (Williams 1995). Each of these par-
titioning methods can result in an aggregation method. A
customary way of choosing each aggregate demand point lo-
cation, given the partition, is to use the centroid of the de-
mand points in each part of the partition. We also note that
medians can also be used, provided they are well-defined . . . .
When the replacement rule (decision D3) is to replace
each demand point by a closest aggregate point, we note that
the three decisions, D1, D2 and D3, are identical to ones made
in solving a location problem; to choose the number of new
facilities, the locations of the new facilities, and the assign-
ment of each demand point to a closest new facility. Thus it
is not surprising that previous work in location theory can be
helpful in doing aggregation.
It is our observation that there seems to be no agreed-
upon way to measure aggregation error. Thus, not surpris-
ingly there is no agreed-upon way to compare two different
aggregations. This also means there is as yet little point in
developing a list of test problems to compare two different
aggregation approaches. In spite of this lack of agreement,
we note that there are at least two fundamental measures
of error, incorrect locations of new facilities, and an incor-
rect objective function value. We focus on this latter con-
cept of error. By an error bound, we mean a number
(hereafter denoted by eb) such that
兩f共X:P兲 ⫺ f共X:P⬘兲兩 ⭐ eb, for all X.
That is, it is guaranteed that regardless of the locations X
of the new facilities, the absolute difference of the objec-
tive function values of the original problem and the ap-
proximate problem will not exceed eb. As we will see in
Table 1 the exact form of eb depends upon the structure of
the original problem, as well as the vector P⬘ of aggregate
locations. Thus, one can readily see from (1) that a good
aggregation scheme can be derived by paying close atten-
tion to the error bound expression when doing the aggre-
gation. In fact, in both Francis et al. (1996) and Rayco et
al. (1997), aggregations are derived for the problems stud-
ied by first deriving the appropriate eb function, and then
heuristically minimizing (by appropriately choosing P⬘) the
eb function.
We now demonstrate the usefulness of error bounds by
showing how to use these error terms to bound other re-
lated important quantities. Specifically, we wish to bound
the additional cost (error) due to implementing the opti-
mal solution to the aggregate model and not the optimal
solution to the original problem: the “cost” of approxima-
tion. We will also show how we can use these bounds to
control the error by adjusting the number of aggregate
demand points. As above, let f(X:P) represent the location
model with respect to the original customer vector P, and
let f(X:P⬘) represent the model with respect to the aggre-
gate vector P⬘. Let X*(X⬘) be the vector of optimal facility
locations for model f(X:P)( f(X:P⬘)). (Occasionally in what
follows, we assume that we have the optimal solution to
the aggregated location problem available to us.) Consider
the following two differences:
兩f共X*:P兲 ⫺ f共X⬘:P⬘兲兩,
兩f共X*:P兲 ⫺ f共X⬘:P兲兩.
The first is the difference between the optimal objective
function value (OFV) using the optimal locations for the
new facilities when serving the original demand point set
and the OFV using the optimal locations for the new facil-
ities when serving the aggregate demand point set. The
second is the difference between the OFV using the opti-
mal locations for the new facilities when serving the origi-
nal demand point set and the OFV using the optimal new
facility locations for the aggregated problem when these
locations serve the original demand point set.
Let eb denote the error bound defined in (1). (See Table
1 for appropriate expressions for a variety of location mod-
els.) Geoffrion’s (1977) theorems 1 and 5 can be used to
show the following:
兩f共X*:P兲 ⫺ f共X⬘:P⬘兲兩 ⭐ eb, (2)
兩f共X⬘:P兲 ⫺ f共X*:P兲兩 ⭐ 2eb. (3)
The difference 兩f(X⬘:P) ⫺ f(X*:P)兩 in (3) is the additional
forgone savings due to implementing an approximate solu-
tion (based on a solution to the aggregate model) and not
an optimal solution. Note that the bound 2eb in (3) can be
computed for any aggregate vector P⬘ before we solve the
(1) aggregate model to optimality and obtain X⬘.

Following Geoffrion (1977), a bound that is stronger
than 2eb can be obtained when X⬘ is known. First rewrite
inequality (2) as
⫺ f共X*:P兲 ⭐ eb ⫺ f共X⬘:P⬘兲.
Adding the term f(X⬘:P) results in
f共X⬘:P兲 ⫺ f共X*:P兲 ⭐ eb ⫹ 关 f共X⬘:P兲 ⫺ f共X⬘:P⬘兲兴. (4)
The optimality of X* for P implies that the left-hand side
of (4) is bounded below by zero. The term in brackets on
the right-hand side is bounded above by eb. Thus the right
side of (4) is at most 2eb. The result is a post-
computational error bound (a posterior bound) that re-
quires X⬘. This bound will be strictly better than 2eb if
f(X:P⬘) undershoots f(X:P) at X⬘ by less than the greatest
possible amount (which is eb).
We now give an overview of the remainder of the paper.
In §2, we discuss several location models that have ap-
peared in the literature. For each discussed model, we
provide an eb function. The main results of §2 are cap-
tured in Table 1. Also, we discuss the problem of finding a
minimal number of aggregate demand points to guarantee
the error bounds will not exceed any given positive con-
stant. Section 3 contains our theoretical results. We de-
velop a general model structure and obtain an error bound
for it. Also we identify the general structure of location
models for which our error bound analysis is possible, and
show that many known models have such structure. Then
we illustrate the results by deriving the error bound for
one of the models studied. Also, we give enough guidance
so that the reader can easily derive the error bounds for
the other problems in Table 1. Finally, in §4 we discuss
possible future research issues.
2. PROBLEMS STUDIED AND ERROR BOUNDS
Table 1 shows a partial list of the location models for
which we have error bounds. Each model includes (near-
est) distances between facilities explicitly in its objective
function, and each has given demand points as well as new
facility locations. Each distance can be multiplied by a
nonnegative number called a weight. The operators involv-
ing the (weighted) distances are the maximum, summation,
and minimum operators. The last column of the table
shows the error bounds for the models. Since the error
bounds hold for all X, we leave unstated the sets of feasi-
ble solutions for the models.
As a preliminary motivation for the error bounds, we
state the following known result (Zemel 1985, Francis and
Lowe 1992), which is based on the triangle inequality. The
lemma amounts to a sort of triangle inequality for nearest
distances, and it is essential for deriving the aggregation
error bounds.
LEMMA 1. Suppose we are given any X. For i ⫽ 1, . . . , m,
we have the following:
D共X, p i 兲 ⭐ D共X, p⬘i 兲 ⫹ d共 p⬘i , p i 兲.
FRANCIS, LOWE, AND TAMIR / 297
Equality holds if and only if some x⬘[i] in X that is closest to
p⬘i is also closest to pi and satisfies d( x⬘[i], pi) ⫽ d( x⬘[i], p⬘i) ⫹
d( p⬘i, pi).
We now discuss briefly the models in the table, referring
to models by their table numbers. In §3 we discuss the
methodology for obtaining the error bounds and give error
bounds for some models not in the table.
The conditional n-median problem, #1 (see Minieka
1980, Berman and Simchi-Levi 1990, and Drezner 1995), is
to locate n new facilities; the travel distance for each de-
mand point can be either to a closest new facility location
in X or to a closest existing service facility in E, whichever
of the two is closest. The nonnegative “weight” wi associ-
ated with each demand point is typically a measure of
relative frequency of travel. Thus f(X:P) is a total travel
distance to closest facilities (new or existing). The condi-
tional n-center model, #6 (Minieka 1980 and Drezner
1989), has a similar interpretation but occurs in a worst-
case context; thus it is the maximum nearest distance that
is of interest. We note that the error bounds for these two
conditional models are the same as those for the conven-
tional n-median and n-center models (Francis and Lowe
1992), that is, the “unconditional” models.
The multifacility minisum (MFMS) model, #2 (see
Francis et al. 1992), adds weighted distances between new
facilities and demand points to weighted distances between
pairs of new facilities. The analogous multifacility minimax
(MFMM) model, #7 (Francis et al. 1992), considers the
maximum of such weighted distances.
The quadratic assignment problem, #3, abbreviated as
QAP (see Burkhard 1990 and Pardalos and Wolkowicz
1994) is a form of the MFMS problem with a discrete
possible choice of new facility locations. We denote the
location of each new facility j by a[ j] and choose a[ j] from
a finite set.
Goldman’s (1971) two-stage processing model, #4, ad-
dresses the processing of mail. Mail originating at a de-
mand point goes through processing at two facilities and
then goes on to some other demand point. The model is
set up so as to consider a “cheapest” choice of the two
facilities for each demand point pair. For demand points h
and i, the weights ahi and chi are associated with the dis-
tances between demand points and new facilities, while the
weight bhi is associated with the distance between the new
facilities.
The supporting median model, #5 (Mirchandani and
Odoni 1979), considers travel between demand point loca-
tions ( pi) and airports (vt). Travel can either be directly as
measured by a metric d2, or by means of a cheapest sup-
porting median as measured by a different metric d1. The
supporting medians could be public transit stops, such as
subway stations. Note that there is no need to aggregate
the airport locations.
The round-trip model, #9 (Elzinga and Hearn 1972),
considers responding to an emergency at some demand
point pi from a closest center in time wiD(X, pi). From pi
298 / FRANCIS, LOWE, AND TAMIR
there is then travel to some given location qi (perhaps a
hospital) in a time of ␻id( pi, qi). The result is a “round-
trip” time of wiD(X, pi) ⫹ ␻id( pi, qi). The weights wi and
␻i reflect the possibility of different travel velocities de-
pending upon the “leg” of the trip. The time to return
from qi to the starting point of the round trip is omitted
from the model as being unimportant compared with the
other times. Because the problem occurs in a worst-case
context, it is the maximum time that is relevant.
The following scenario motivates the multistop model,
#8 (Handler and Mirchandani 1979). A breakdown repair
service is to be located at some point x. With probability
␣, a service unit is dispatched directly to some breakdown
point pi. With probability 1 ⫺ ␣ the unit is first dispatched
to some point p0 to collect existing equipment and then to
the point pi. The maximum expected response time to a
random call is of interest. Note the similarity in model
structure to the round-trip problem.
The cent-dian model, #10 (Halpern 1978), also called
the medi-center model (Handler 1985), considers what
amounts to a weighted average of an n-median and a
n-center objective. The goal is to find a balance, using an
adjustable “balancing” parameter ␤, of efficiency (least-
cost) and equity (worst-case). The error bound reflects the
model structure and combines n-median and n-center er-
ror bounds.
The one-facility ᐉp model, #11 (Shier and Dearing
1983), captures several different objective functions, de-
pending upon the value of p (1 聿 p 聿 ⬁). When p ⫽ 1,
the median problem results, whereas p ⫽ ⬁ corresponds to
the center problem. Note that the error bound inherits the
structure of the model.
The obnoxious location model, #12 (Erkut and Neuman
1989), considers the minimum of the distances between
each demand point and a closest obnoxious new facility.
This minimum is to be maximized. This model is the only
maximization model in the table. If we also include inside
the min-operator the weighted minimum of the distances
between the obnoxious new facilities, the error bound re-
mains valid. Note that the error bound does not reflect the
“min” structure of the original model. All the models in
the table but this one fit into the general class of models
we discuss. We provide separate but related theory for this
model.
In §3 we show that if each weight in the table that
multiplies a distance is replaced by a concave and nonde-
creasing function of the distance, then the error bounds
are still valid. It is relevant to note that such a function can
model economies of scale in distances.
Certain error bound properties are evident from the
error bound column. The error bound expressions all in-
clude the weights involving the demand points and omit
the other weights. The error bounds all involve the dis-
tances between the pi and the p⬘i and are nondecreasing in
these distances. The error bounds are zero if and only if
pi ⫽ p⬘i for every positively weighted pi. The error bounds
all involve max-operators and/or sum-operators; they “in-
herit” these operators from the original model structure,
with the one exception of the obnoxious location model.
We consider all these properties quite reasonable. Indeed,
it can be shown that each of the error bounds defines a
distance between P and P⬘, given the reasonable assump-
tion that if the error bound value is zero then every d( p⬘i,
pi) ⫽ 0. Thus attempts to make the lower bound small can
be viewed as attempts to make P⬘ “close” to P.
The error bound expressions lead in a natural way to the
definition of “second-order” location problems. Such
second-order problems have previously been noted by
Francis and Lowe (1992) when the original model is either
an n-median or n-center model.
To see how such second-order problems are obtained,
suppose Q is a collection of aggregate demand points, with
兩Q兩 fixed. Suppose we choose as p⬘i a closest point in Q to
pi, so that d( pi, p⬘i) ⫽ D(Q, pi). (Picking as p⬘i a point in Q
other than a closest one cannot give a smaller error bound
value.) If we make the replacement of each d( pi, p⬘i) by
D(Q, pi) in the error bound expression we get an expres-
sion, say eb(Q:P). We can consider the problem of mini-
mizing eb(Q:P) over Q, subject to 兩Q兩 fixed (or an
adjustable parameter), as the second-order location model.
For models 1– 4 in the table, the second-order model is
a 兩Q兩-median model. For models 6 – 8 and model 12 in the
table, the second-order model is a 兩Q兩-center model. The
second-order models for models 5 and 9 are new, as best
as we can tell. The second-order model for model 10 is a
cent-dian/medi-center model, while for model 11 it is a
sort of ᐉp兩Q兩-median model. We believe that the predomi-
nance of resulting secondary models that are 兩Q兩-center or
兩Q兩-median models reinforces the central role these two
models play in location theory.
The error bounds of Table 1 can be used to drive de-
mand point aggregation heuristic algorithms. When the
original model is the n-median or n-center model, Francis
et al. (1996) and Rayco et al. (1997), respectively, have
studied the use of low computational order “row-column”
heuristics for minimizing the resulting 兩Q兩-median or 兩Q兩-
center models to obtain a small error bound. Their point
of departure is what Francis and Lowe (1992) call the
“paradox of aggregation.”
Essentially, the paradox states that the same reasons
that require aggregation in the original model also limit
what can be done computationally in minimizing the error
bound model exactly. Certainly the paradox applies to all
the models in the table. There are, however, several things
that can be done. First, when the original distances are
network shortest-path distances, the distances in the error
bound model can be taken to be simpler planar distances,
such as rectilinear distances. Second, 兩Q兩 can be treated as
an adjustable model parameter.
This second recourse, adjusting 兩Q兩, is particularly im-
portant to note because, for many location problems, the
number of new facilities is relatively small and can seldom
be varied within a large range. In this sense the second-
order model is fundamentally different from the first-order

Table 1 Aggregation error bounds for a family of location models.
No. Location Model f(X:P)
1. ¥ {wi min{D(E, pi), D(X, pi)兩i}
2. ¥ {wijd( xj, pi)兩i, j} ⫹ ¥ {vjkd( xj, xk)兩j ⬍ k}
3. ¥ ¥ {wijd(a[ j], pi)兩i, j} ⫹ ¥ {vjkd(a[ j], a[k])兩j ⬍ k}
4. ¥ ¥ {min{ahid( ph, xj) ⫹ bhid( xj, xk) ⫹ chid( xk, pi)兩j,
k}兩h, i}
5. ¥ ¥ {wit min{d2( pi, vt), min{d1( pi, xj) ⫹ d1( xj, vt)兩j}兩i, t} Supporting median
6. max{wi min{D(E, pi), D(X, pi)}兩i}
7. max{max{wijd( xj, pi)兩i, j}, max{vjkd( xj, xk)兩j ⬍ k}}
8. max{␣d( x, pi) ⫹ (1 ⫺ ␣)[d( x, p0) ⫹ d( p0, pi)]兩i}
␣ is a probability
9. max{wiD(X, pi) ⫹ ␻id( pi, qi)兩i}
10. ¥ {wiD(X, pi)兩i} ⫹ ␤ max{wiD(X, pi)兩i}
␤ is a positive constant
11. [¥ {d( x, pi)p兩i}]1/p
12. min{wiD(X, pi)兩i}
model. Indeed, this difference suggests that asymptotic
analysis, as done by Zemel (1985) and by Rayco and Fran-
cis (1996), may be a fruitful approach to solving the sec-
ondary models.
For more detail on using error bounds to suggest aggre-
gation methods, using simpler distances, and adjusting 兩Q兩,
see Francis et al. (1996), Rayco et al. (1997), and Francis
et al. (1999). In the first two listed papers the authors find
that the error bound for the n-median problem was usually
not tight but worked well as a surrogate error measure,
and that experimentally, the error bound for the (un-
weighted) n-center problem was usually found to be tight.
In the latter paper, the authors observed that, based on
experimental results, error is decreasing in 兩Q兩/兩X兩.
It is also possible, as discussed by Andersson et al.
(1998), to view the use of approximating planar distances
in the secondary problems as being “strategic” planning.
One can then obtain a family of smaller “tactical” sub-
problems to solve, where the distances can be the original
distances, but using the aggregate demand points. They
found that this approach worked quite well for n-median
aggregation, whereas results were mixed for n-center ag-
gregation. The approach may be viewed as a heuristic de-
composition method.
Consider now how the error bound expressions can be
useful in controlling or reducing the error by adjusting q,
the number of distinct aggregate demand points in P⬘, i.e.,
the number of points in Q. As an illustration, consider first
the (unweighted) n-center model. Suppose we wish to ag-
gregate the original vector of demand points P and ensure
that the error term, 2eb (from (3)), is at most B. The
relevant question is how big should the set Q be, i.e., what
is the minimum number of aggregate demand points
needed to ensure that 2eb 聿 B. Of course, this problem by
itself is NP-hard for general metric spaces or networks. It
is equivalent to the problem of finding the minimum num-
ber of centers (i.e., aggregate demand points) needed to
cover each one of the original demand points within a
distance of B/ 2. However, the minimum number of aggre-
FRANCIS, LOWE, AND TAMIR / 299
Model Name Error Bound
Conditional n-median ¥ {wid( p⬘i, pi)兩i}
MFMS ¥ {wijd( p⬘i, pi)兩i, j}
QAP ¥ {wijd( p⬘i, pi)兩i, j}
Goldman’s 2-stage ¥ ¥ {ahid( ph, p⬘h) ⫹ chid( pi, p⬘i)兩h, i}
¥ ¥ {wij max{d1( pi, p⬘i), d2( pi, p⬘i)}兩i, j}
Conditional n-center max{wid( p⬘i, pi)兩i}
MFMM max{wijd( p⬘i, pi)兩i, j}
multistop max{d( pi, p⬘i)兩i}
Round-trip max{wid( p⬘i, pi) ⫹ ␻i兩d( pi, qi) ⫺
d( p⬘i, qi)兩兩i}
Cent-dian/medi-center ¥ {wid( p⬘i, pi)兩i} ⫹ ␤ max{wid( p⬘i, pi)兩i}
One-facility lp model [¥ {d( p⬘i, pi)p}]1/p
Obnoxious max{wid( p⬘i, pi)兩i}
gate demand points can be approximated within reason-
able accuracy in polynomial time. For example, if qmin
denotes the minimum number of aggregate demand points
needed and the space is the Euclidean plane, Hochbaum
and Maas (1985) provide efficient algorithms that will find
q⬘ centers (aggregate points) ensuring the desired bound,
and q⬘ is arbitrarily close to qmin. Specifically, for any fixed
positive ⑀ their scheme computes in time which is polyno-
mial in m ⫽ 兩P兩 and ⑀, a set of q⬘ aggregate demand points,
such that the error bound is at most B, and q⬘ 聿 [(1 ⫹
⑀)2]qmin. They give similar results for d-dimensional Eu-
clidean and rectilinear spaces. For general metric spaces
or networks the best known approximation of qmin is not as
good. The best values of q⬘ that can be computed efficiently
are of the order [log兩P兩]qmin. Such bounds are guaranteed if
we use, for example, a greedy scheme to solve the above
covering problem on the points in P (see Chvatal 1979).
The above approach to bound and control the number
of aggregate demand points can also be adapted to apply
to the n-median problem. Again, suppose that we want to
find the minimum number of aggregate demand points
qmin needed to ensure an upper bound of B on the error
term 2eb for the n-median problem. Unlike the above re-
sults for the n-center problem, we are unaware of any
polynomial time algorithm that can approximate qmin by a
constant factor and at the same time ensure the bound B
on the error term 2eb. However, the results of Lin and
Vitter (1992) can be used to achieve the following result.
For any fixed positive ⑀ we can compute, in time that is
polynomial in m ⫽ 兩P兩 and ⑀, a set of q⬘ aggregate demand
points, such that the error bound is at most 2(1 ⫹ ⑀) B and
q⬘ 聿 (1 ⫹ 1/⑀)qmin. For example, if ⑀ ⫽ 1, an error bound
of 4B can be guaranteed by computing in polynomial time
q⬘ aggregate demand points, where q⬘ 聿 2qmin.
To conclude, we have demonstrated that for several im-
portant location models, the error bounds we will derive in
§3 can be used quite efficiently to assess and control the
“cost of approximation” by selecting the set of aggregate
demand points of the appropriate size.
300 / FRANCIS, LOWE, AND TAMIR
Figure 1. Construction process for SAND location models.
3. SAND LOCATION MODELS
In this section we present a general and unifying approach
to derive error bounds for several of the most common
location models, including all the models in Table 1. We
employ composition function notation concepts introduced
for location modeling by Hooker et al. (1991).
Figure 1 illustrates a fundamental feature of all the lo-
cation models we consider.
All the models we study are constructed by beginning
with a vector of new facility locations X ⫽ ( x1, . . . , xn) and
a vector of demand point locations P ⫽ ( p1, . . . , pm).
Then various distances between elements in X and P are
computed, resulting in a “distance-like” vector we denote
by T(X:P). Finally a “costing function” g is applied to
T(X:P) to give the location model f(X:P) ⫽ g(T(X:P)).
For example, consider T(X:P) ⫽ (D(X, p1), . . . , D(X,
pm)). For any nonnegative vector U ⫽ (u1, . . . , um), if the
costing function is g(U) ⫽ w1u1 ⫹ . . . ⫹ wmum, then f(X:
P) ⫽ g(T(X:P)) is the n-median model. If g(U) ⫽
max{w1u1, . . . , wmum}, then f(X:P) ⫽ g(T(X:P)) is the
n-center model.
It is the choice of a costing function that gives the model
much of its structure. Two properties of the costing func-
tion are essential to our approach: (1) the nondecreasing
(ND) property, and (2) subadditivity (SA). We refer to a
costing function with both these properties as a SAND
function. We call a location model constructed using the
process the figure illustrates a SAND location model. The
“distance-like” vector must also satisfy a type of triangle
inequality. Namely, if P⬘ denotes the vector of aggregate
demand points, there is a nonnegative vector S(P:P⬘) ⫽
S(P⬘:P) so that T(X:P) 聿 T(X:P⬘) ⫹ S(P⬘:P) and T(X:
P⬘) 聿 T(X:P) ⫹ S(P:P⬘) for all X. Lemma 1 illustrates
these inequalities when T(X:P) ⫽ (D(X, p1), . . . , D(X,
pm)) and S(P⬘:P) ⫽ (d( p1, p⬘1), . . . , d( pm, p⬘m)). We define
these properties formally in later subsections.
In §3.1 we define SAND functions and list some of their
properties. These properties provide basic “building
blocks” for constructing the SAND location models we
study. For example, because the SAND property is pre-
served under the addition and maximization operations,
both the n-median and n-center models are SAND mod-
els. Because a certain type of concave function is a SAND
function, replacing the weights of any model in Table 1 by
concave, nondecreasing functions of the distances (thus
capturing transportation economies of scale) results in a
SAND location model. Knowing that certain compositions
of SAND functions give a SAND function is useful in
Theorem 5, which shows how to combine two such loca-
tion models to obtain another one.
A SAND costing function gk considered in §3.2 permits
capturing a family of location models in one model; the
k-centrum model of Slater (1978) and Andreatta and Ma-
son (1985a, 1985b). If T(X:P) ⫽ (w1D(X, p1), . . . , wmD(X,
pm)), then f(X:P) ⫽ gk(T(X:P)) is the sum of the k-largest
entries in T(X:P). Taking k ⫽ 1 gives the n-center model;
taking k ⫽ m gives the n-median model. The fact that the
error bound for this model, gk(w1d( p1, p⬘1), . . . , wmd( pm,
p⬘m)), reflects the structure of the costing function is a
strong indication that it is important to consider carefully
the structure of the location model when doing demand
point aggregation. Similarly, we discuss the ᐉp-norm model
of Shier and Dearing (1983), listed in Table 1. Again, this
model captures a family of location models in one.
Subsection 3.3 focuses on the general SAND location
model, which includes all but the obnoxious model in Ta-
ble 1 as a special case.
In §3.4 we derive the error bound for the general model
via Theorem 3, and then illustrate its application to the
supporting-median location model, one of the most diffi-
cult models to obtain the error bound for. The general
location model is defined using the idea of a metric space,
but no insight is lost by supposing all distances to be net-
work shortest-path distances, or planar distances. Also in
this section we show how to conclude the resulting model
is still SAND, if terms such as fixed costs (which are not
dependent on the demand point location vector P) are
built into the location model. Thus, for example, if we add
fixed costs to the n-median model, there is no change in
the error bound. Similarly, having distances between new
facilities in the model, as in the multifacility and QAP
models in Table 1, has no effect on the error bound.
In §3.5 we show how to combine two SAND location
models to obtain a SAND location model, and we illus-
trate this approach with the cent-dian model of the table.
The fact that a combination of SAND models can be a
SAND model expands the class of such models and pro-
vides a way to analyze more complicated models by break-
ing them into smaller models.

The obnoxious location model shown in Table 1 is not a
SAND model because it does not have the subadditivity
property. Nevertheless, in §3.6, we obtain an error bound
for it and other related models using theory related to the
foregoing theory.
Finally, in §3.7, we indicate how to generalize our error
bound approach when the distance symmetry property,
d( x, y) ⫽ d( y, x) for all x and y, fails, but the triangle
inequality still holds. Reasons such as one-way streets and
rush-hour traffic can result in such a failure when the dis-
tance has units of time.
3.1. Properties of SAND Functions
In this subsection we list several of the most useful prop-
erties of SAND costing functions. These properties derive
from quite similar properties of subadditive functions. See
Rosenbaum (1950) for the proofs of these results on
subadditive functions and for additional results on subad-
ditive functions. Many of the properties are obtained from
ones of Rosenbaum simply by replacing “subadditive” by
“SAND.” We have already illustrated the use of most of
the properties in our overview of §3.
Unless otherwise specified, the domain of definition of
each real-valued costing function g will be R⫹ r
, the non-
r
negative orthant of R , for any positive integer r. For each
such costing function g we make the following two as-
sumptions:
ISOTONICITY/NONDECREASING ASSUMPTION. For each pair
r
of vectors u ⫽ (u1, . . . , ur), v ⫽ (v1, . . . , vr) 僆 R⫹ , u 聿 v,
implies g(u) 聿 g(v).
SUBADDITIVITY ASSUMPTION. For each pair of vectors u ⫽
r
(u1, . . . , ur), v ⫽ (v1, . . . , vr) 僆 R⫹ , g(u ⫹ v) 聿 g(u) ⫹
g(v). Thus a SAND function is both isotone (nondecreas-
ing) and subadditive. In particular, if g(u) is a SAND func-
tion it is nonnegative.
From Rosenbaum’s properties of subadditive functions
we conclude the following:
S-1. If g1(u) and g2(u) are SAND functions, and c1 and
c2 are positive constants, then the function c1g1(u) ⫹
c2g2(u) is a SAND function.
S-2. If g1(u) is a nonnegative and subadditive function,
g2(u) is nonnegative and ⫺g2(u) is isotone, then the func-
tion g1(u) g2(u) is a SAND function if it is isotone.
r
S-3. If g1(u) is a SAND function over R⫹ , and g2(u) is a
1
SAND function on R⫹, then the composite function
g2( g1(u)) is a SAND function of u on R⫹ r
. let u[1] 肁u[2] 肁 . . . 肁 u[r] denote the components of u in
S-4. If { gi(u)} is a set of SAND functions, all bounded
above at each point of R⫹ r
, then the function defined at
r
each point u of R⫹ as the maximum (or sup) of the values
of { gi(u)} at that point is a SAND function.
r
S-5. If g(u) is a SAND function over R⫹ , then for any
fixed u ⫽ (u1, . . . , ur), the function g(␭u1, . . . , ␭ur) is a
SAND function of the single nonnegative variable ␭.
FRANCIS, LOWE, AND TAMIR / 301
S-6. If g(u) is a concave, isotone function of a single
real variable u, satisfying g(0) 肁 0, then g(u) is a SAND
function.
3.2. Examples of SAND Functions
In this section we show that several unifying location mod-
els, each of which includes both the n-center and n-median
models as special cases, are SAND models.
Subadditive functions play a key role in convexity analy-
sis (see Rockafellar 1970, §15). Norm functions are subad-
ditive. Specifically, a real-valued function g(u) on Rr is a
norm if:
1. g(u) ⬎ 0, for all u ⫽ 0.
2. g(u) is subadditive.
3. g(u) is positively homogeneous (of degree 1), i.e.,
g(␭u) ⫽ ␭g(u), for all u 僆 Rr and ␭ 僆 R⫹.
4. g(⫺u) ⫽ g(u), for all u 僆 Rr.
As a result of the above, we note that every norm func-
r
tion that is isotone on R⫹ is a SAND function. In particu-
lar, the ᐉp norm, p 肁 1, defined by g(u1, . . . , ur) ⫽ (up1
⫹ . . . ⫹ urp)1/p, is a SAND function. The use of this costing
function g was introduced by Shier and Dearing (1983) as
a unifying model for the n-median and n-center models
mentioned above. Note that the median model corre-
sponds to the case p ⫽ 1, while the center model corre-
sponds to p ⫽ ⬁.
Rockafellar (1970, Theorem 4.7) states that a positively
homogenous function on Rr is convex if and only if it is
subadditive. Thus we conclude that every isotone, posi-
tively homogenous, and convex function is a SAND func-
tion. We use the latter result to prove that certain order
functions are SAND functions.
We have already noted that for each vector u ⫽
(u1, . . . , ur) in Rr, the functions ¥j⫽1
r
uj and max{uj兩j ⫽
1, . . . , r} are both SAND functions. (These functions are
used to derive error bounds for the n-median and n-center
models, respectively.) In an effort to unify these two loca-
tion models and obtain a more general framework, we
consider certain order functions and show that they are
SAND functions as well. For the use of these order func-
tions in k-centrum tree network location models, see An-
dreatta and Mason (1985a, 1985b) and Slater (1978). Let
T(X:P) ⫽ (w1D(X, p1), . . . , wmD(X, pm)). The k-centrum
location model is as follows: f(X:P) ⫽ gk(T(X:P)), where
gk(T(X:P)) is the sum of the k-largest entries in T(X:P).
Order Functions. For any vector u ⫽ (u1, . . . , ur) in Rr,
decreasing order. For each j ⫽ 1, . . . , r, hj(u) ⫽ u[ j] is
called the jth largest component of u, and gj(u) ⫽ ¥i⫽1 j
hi(u) is called the jth largest component sum of u.
THEOREM 1. For each j ⫽ 1, . . . , r, hj(u) is an isotone
function defined on Rr, and gj(u) is a SAND function de-
fined on Rr.
302 / FRANCIS, LOWE, AND TAMIR
PROOF. To prove the isotonicity of the function hj, con-
sider a pair of vectors, u, v, satisfying ui 肁 vi, for i ⫽
1, . . . , r. Without loss of generality, suppose that v1
肁 . . . 肁 v r.
The function hj(u) is the jth largest element of the set
{u1, . . . , uj, . . . , ur}. Therefore, it is greater than or equal
to the jth largest element of the subset {u1, . . . , uj}, which
is equal to min{u1, . . . , uj}. Using the isotonicity of the
minimum operator we obtain
h j 共v兲 ⫽ v j ⫽ min兵v 1 , . . . , v j 其 ⭐ min兵u 1 , . . . , u j 其
⭐ h j 共u兲.
We conclude that hj is isotone.
The function gj is the sum of j isotone functions, and
therefore it is isotone. Because gj is positively homoge-
neous, it follows from Rockafellar (1970, Theorem 4.7),
mentioned above, that gj is subadditive if and only if it is
convex. Thus, it remains to show that gj is convex.
Let u, v be a pair of vectors in Rr and let t be any real
number satisfying 0 聿 t 聿 1. We have gj(tu ⫹ (1 ⫺ t)v) ⫽
¥ {tuk ⫹ (1 ⫺ t)vk兩k 僆 I} for some I 傺 {1, . . . , r}, 兩I兩 ⫽ j.
Thus
g j共tu ⫹ 共1 ⫺ t兲v兲 ⫽ t 冘 兵u 兩k 僆 I其
k
⫹ 共1 ⫺ t兲 冘 兵v 兩k 僆 I其 ⭐ tg 共u兲 ⫹ 共1 ⫺ t兲 g 共v兲
k
j j
We now conclude gj is a SAND function. □
THEOREM 2. Let a1 肁 . . .肁 ar be a sequence of nonnega-
r
tive reals. The function g(u) ⫽ ¥j⫽1 ajhj(u) is a SAND
r
function defined on R .
PROOF. Using summation by parts, the function g(u) can
be represented as
冘 共a ⫺ a
r⫺1
g共u兲 ⫽ a r g r共u兲 ⫹ j j⫹1 兲 g
j
共u兲.
j⫽1
Using this representation, the result follows directly from
property S-1 and the previous theorem, because gj(u) is a
SAND function, and aj ⫺ aj⫹1 肁 0 for j ⫽ 1, . . . , r ⫺ 1. □
3.3. The General SAND Location Model
In a typical facility location model there is a vector of
demand points P ⫽ ( p1, . . . , pm), embedded in some met-
ric space Y (see Goldberg 1976). The objective is to select
a vector X ⫽ ( x1, . . . , xn) of facilities (servers) in Y to
optimize some function of the distances {d( xj, pi)兩j ⫽
1, . . . , n; i ⫽ 1, . . . , m} between the m demand points
and the n servers and the distances {d( xj, xt)兩j, t ⫽ 1, . . . ,
n} among the n servers themselves.
To formulate a model, let T(X:P) denote a “distance-
like” vector (to be defined shortly) of nonnegative reals,
involving the above distances. Formally, T(X:P) has r real
components, say T1(X:P), . . . , T r(X:P), then T j(X:P), j ⫽
1, . . . , r, is viewed as a mapping from the space Yn ⫻ Ym
into the real line R. The objective function of the location
model f(X:P) is modeled by some real-valued costing func-
r
tion g(u1, . . . , ur) defined over R⫹ , the nonnegative or-
r
thant of R . Specifically,
f共X:P兲 ⫽ g共T 1共X:P兲, . . . , T r共X:P兲兲 ⫽ g共T共X:P兲兲.
At the beginning of §3 we discussed two special cases of
this model: the classical n-median and n-center models.
Every model in the table, except the last, is a special case
of this model.
We now continue by formally defining the distance-like
assumptions on the function T(X:P).
Associated with T(X:P) we assume that there is a second
mapping. Given any pair of vectors P ⫽ ( p1, . . . , pm) and
P⬘ ⫽ ( p⬘1, . . . , p⬘m), this second mapping is defined by
S(P:P⬘) ⫽ (S1(P:P⬘), . . . , Sr(P:P⬘)), from Ym ⫻ Ym into
r
R⫹ , where, for j ⫽ 1, . . . , r, Sj(P:P⬘) is a nonnegative real
number. The two mappings satisfy the following assump-
tions.
DISTANCE-LIKE ASSUMPTION. For each triplet of vectors of
points, X ⫽ ( x1, . . . , xn), P ⫽ ( p1, . . . , pm), and P⬘ ⫽
( p⬘1, . . . , p⬘m), in the metric space Y,
S共P:P⬘兲 ⫽ S共P⬘:P兲,
T共X:P兲 ⭐ T共X:P⬘兲 ⫹ S共P⬘:P兲.
The above assumption generalizes the triangle inequal-
ity property of the distance (metric) function. For example,
consider again the n-median model, where Ti(X:P) ⫽ D(X,
pi). For i ⫽ 1, . . . , m, define Si(P:P⬘) ⫽ d( pi, p⬘i). It is easy
to verify that the distance-like property is implied by the
symmetry of distance, the triangle inequality, and Lemma
1.
Our last supposition of the general location model in-
volves the objective function f(X:P) ⫽ g(T1(X:P), . . . ,
Tr(X:P)). The real function g(u1, . . . , ur), defined on R⫹ r
,
is assumed to be SAND.
3.4. Derivation of the Error-Bound Expression
We now use the general model presented above to derive
explicit expressions for eb, which are independent of X but
depend on the original set of demand points P and the set
of aggregate demand points P⬘ to be selected.
THEOREM 3. Consider the location model f(X:P) ⫽ g(T(X:
P)), where T(X:P) satisfies the distance-like assumption,
and g is a SAND function. Then,
兩f共X:P兲 ⫺ f共X:P⬘兲兩 ⭐ g共S共P:P⬘兲兲 for all X.
PROOF. The distance-like property implies
T共X:P兲 ⭐ T共X:P⬘兲 ⫹ S共P⬘:P兲.
Next, from the isotonicity of the function g, we have
g共T共X:P兲兲 ⭐ g共T共X:P⬘兲 ⫹ S共P⬘:P兲兲.
Applying the subadditivity of g, we obtain
g共T共X:P兲兲 ⭐ g共T共X:P⬘兲兲 ⫹ g共S共P⬘:P兲兲.
Due to symmetry, we also have

g共T共X:P⬘兲兲 ⭐ g共T共X:P兲兲 ⫹ g共S共P:P⬘兲兲.
Finally, combining the above inequalities and using the
symmetry assumption S(P:P⬘) ⫽ S(P⬘:P), it follows that
兩f共X:P兲 ⫺ f共X:P⬘兲兩 ⫽ 兩g共T共X:P兲兲 ⫺ g共T共X:P⬘兲兲兩
⭐ g共S共P:P⬘兲兲. □ Using the above definitions, we get
To demonstrate the above result we apply it to the sup-
porting median model discussed in Mirchandani and
Odoni (1979). The input consists of a set of demand points
P ⫽ ( p1, . . . , pm), a set of existing facilities (e.g., airports)
V ⫽ (v1, . . . , vr), and nonnegative weights {wi,t兩i ⫽ 1, . . . ,
m; t ⫽ 1, . . . , r}. The objective is to select a set of new
facilities to optimize the objective,
冘冘
m r
w i,t min兵d 2 共 p i , v t 兲, min 兵d 1 共 p i , x j 兲
i⫽1 t⫽1 j⫽1,. . .,n
⫹ d 1 共 x j , v t 兲其其.
(d1 and d2 are two different metrics defined on Y, repre-
senting travel by a supporting median and direct travel,
respectively.)
We now define the functions T((X, V):P), S(P:P⬘), and
g, corresponding to the supporting median model. For
each pair of indices i, t; i ⫽ 1, . . . , m; t ⫽ 1, . . . , r, set
T i,t共共X, V兲:P兲 ⫽ min兵d 2 共 p i , v t 兲, min 兵d 1 共 p i , x j 兲
j⫽1,. . .,n
⫹ d 1 共 x j , v t 兲其其,
i,t
S 共P:P⬘兲 ⫽ max兵d 1 共 p i , p⬘i 兲, d 2 共 p i , p⬘i 兲其.
Finally, set
冘冘w
m r
g共u兲 ⫽ i,t u i,t .
i⫽1 t⫽1
To apply Theorem 3 we demonstrate that all the assump-
tions are satisfied. It is clear that g is a SAND function,
and S(P:P⬘) is symmetric and nonnegative. We only need
to satisfy the distance-like assumption,
T i,t共共X, V兲:P兲 ⭐ T i,t共共X, V兲:P⬘兲 ⫹ S i,t共P:P⬘兲.
Indeed, for any fixed i, t, and j ⫽ 1, . . . , n,
d 1 共 p i , x j 兲 ⫹ d 1 共 x j , v t 兲 ⭐ d 1 共 p⬘i , x j 兲 ⫹ d 1 共 x j , v t 兲
⫹ d 1 共 p i , p⬘i 兲.
Also
d 2 共 p i , v t 兲 ⭐ d 2 共 p⬘i , v t 兲 ⫹ d 2 共 p i , p⬘i 兲.
Let
A i ⫽ max兵d 1 共 p i , p⬘i 兲, d 2 共 p i , p⬘i 兲其.
Then from the above inequalities,
d 1 共 p i , x j 兲 ⫹ d 1 共 x j , v t 兲 ⭐ d 1 共 p⬘i , x j 兲 ⫹ d 1 共 x j , v t 兲 ⫹ A i,
d 2 共 p i , v t 兲 ⭐ d 2 共 p⬘i , v t 兲 ⫹ A i,
for a fixed pair i, t and all j ⫽ 1, . . . , n. Taking the
minimum operator over both sides of the above n ⫹ 1
inequalities implies that
FRANCIS, LOWE, AND TAMIR / 303
min兵d 2 共 p i , v t 兲, min 兵d 1 共 p i , x j 兲 ⫹ d 1 共 x j , v t 兲其其,
j⫽1,. . .,n
⭐ min兵d 2 共 p⬘i , v t 兲, min 兵d 1 共 p⬘i , x j 兲 ⫹ d 1 共 x j , v t 兲其其
j⫽1,. . .,n
⫹ A i.
T i,t共共X, V兲:P兲 ⭐ T i,t共共X, V兲:P⬘兲 ⫹ S i,t共P:P⬘兲.
Thus, we conclude that an error bound for the supporting
median model is given by
冘冘w
m r
i,t
i,t S 共P:P⬘兲
i⫽1 t⫽1
冘冘w
m r
⫽ max兵d 1 共 p i , p⬘i 兲, d 2 共 p i , p⬘i 兲其.
i,t
i⫽1 t⫽1
Now consider the n-median model with concave SAND
functions of nearest distances. From Property S-6, §3.1
(see Rosenbaum 1950, Theorem 1.4.3) we know that a
concave, isotone function g(u) of a single real variable u,
satisfying g(0) 肁 0, is a SAND function. As an example
consider the following extension of the classical n-median
model, where we build in economies of scale in distance
into the model.
Suppose that each customer pi, i ⫽ 1, . . . , m, is associ-
ated with a transportation cost function ci of the distance
traveled to the respective server, D(X, pi). Specifically, ci is
a concave, isotone function of a single variable, satisfying
ci(0) 肁 0. The location model is defined by the objective
冘 c 共D共X, p 兲兲.
m
f共X:P兲 ⫽ i i
i⫽1
To obtain an error bound for this extended model, we
apply Theorem 3. Define the vectors T(X:P) ⫽ (T⬘(X:
P), . . . , Tm(X:P)) and (S⬘(P:P⬘), . . . , Sm(P:P⬘)) as follows:
T i共X:P兲 ⫽ c i 共D共X, p i 兲兲, S i共P:P⬘兲 ⫽ c i 共d共 p i , p⬘i 兲兲,
for all i ⫽ 1, . . . , m. Using the concavity of the function ci,
we note that ci is a SAND function and therefore,
c i 共D共X, p i 兲兲 ⭐ c i 共D共X, p⬘i 兲兲 ⫹ c i 共d共 p⬘i , p i 兲兲.
Thus,
T i共X:P兲 ⭐ T i共X:P⬘兲 ⫹ S i共P⬘:P兲.
m
Setting g(u1, . . . , um) ⫽ ¥i⫽1 ui and applying Theorem 3,
we conclude that an error bound for this model is given by
冘 c 共d共 p , p⬘ 兲兲.
m
i i i
i⫽1
Finally we point out that the results of Theorem 3 ex-
tend easily to models that include fixed or setup costs for
the new facilities, as well as other terms that are indepen-
dent of the set of customers P. To formulate this exten-
sion, let H(X) be a mapping from Yn to the space Rl.
Specifically, if H(X) has l real components, H1(X), . . . ,
H1(X), then Hj(X), j ⫽ 1, . . . , l, is viewed as a mapping
304 / FRANCIS, LOWE, AND TAMIR
from Yn into the real line R. For example, H(X) can be a
vector of setup costs of some or all of the facilities in X or
the vector of distances between some pairs of points in X.
We have the following generalization of Theorem 3. (For
brevity we omit the proof because it is very similar to the
proof of Theorem 3.)
THEOREM 4. Consider the location model f(X:P) ⫽ g(T(X:
P), H(X)), where T(X:P) satisfies the distance-like assump-
tion, and g is a SAND function. Then,
兩f共X:P兲 ⫺ f共X:P⬘兲兩 ⭐ g共S共P:P⬘兲, 0兲.
As an example of Theorem 4, f(X:P) might be the
n-median model including a collection of fixed costs, as-
sembled into a vector H(X), and added to the sum of
weighted closest distances. The error bound for this model
would be the same as for the model without the fixed costs.
3.5. Hyper-SAND Models
The above general model can be further generalized to
obtain error bounds for complex location models, defined
by compositions of simpler location models. For example,
consider the n-cent-dian model, where the objective is de-
fined as a sum (or convex combination) of the objective
functions of the n-median and the n-center models. In this
case, it can be shown directly that the sum of the error
bounds for the n-median and the n-center models is an
error bound for the n-cent-dian model. We will show that
this result can be extended to any composition of models
as long as the composition function itself can be expressed
in terms of a SAND function.
Consider a collection of s location models, { f1(X:
P), . . . , fs(X:P)}. Suppose that for each j ⫽ 1, . . . , s,
fj(X:P) ⫽ gj(T(X:P)), where gj is a SAND function. Let g0
be a SAND function, and define a composite model by
f共X:P兲 ⫽ g 0 共 f 1 共X:P兲, . . . , f s 共X:P兲兲.
An error bound for the composite model is obtained by a
composition of the error bounds of the individual models.
We omit the proof, as it is quite similar to that of Theorem
3.
THEOREM 5. Let g1(u), . . . , gs(u) be a collection of s
r From symmetry we also have
SAND functions, defined on R⫹ . Let g0(v) be a SAND
s
function defined on R⫹. Consider the location model
f(X:P) defined by
f共X:P兲 ⫽ g 0 共 g 1 共T共X:P兲兲, . . . , g s 共T共X:P兲兲兲.
Then,
兩f共X:P兲 ⫺ f共X:P⬘兲兩
⭐ g 0 共 g 1 共S共P:P⬘兲兲, . . . , g s 共S共P:P⬘兲兲兲.
Notice that with the above notation, each function gj can
depend on a different component of T and a different
component of S.
The example of the n-cent-dian model presented above
is a special case of the theorem, where s ⫽ 2, f1(X:P) ⫽
g1(T(X:P)) is the median objective, f2(X:P) ⫽ g2(T(X:P))
is the center objective, and g0(v1, v2) ⫽ v1 ⫹ v2.
We note that the above results for the hyper-SAND
model apply to any composition of any number of SAND
models from the table in §2.
3.6. Obnoxious Location Models
The crucial assumption in the general model requiring that
the objective is a SAND function does not hold for prob-
lems dealing with the location of obnoxious facilities,
where the goal is to maximize some isotone function of the
distances between the customers and the new facilities.
Therefore, the above approach for deriving error bounds is
not applicable to obnoxious models.
We present a weaker model that is useful to obtain error
bounds for some obnoxious facility location problems. We
replace the subadditivity property by the following assump-
tion: Let e 僆 Rr denote the vector, all of whose compo-
nents are equal to 1. A function g(u) is e-subadditive on
R⫹r r
, if for any u 僆 R⫹ , and ␭ 僆 R⫹1
,
g共u ⫹ ␭ e兲 ⭐ g共u兲 ⫹ g共 ␭ e兲.
To motivate this definition, note that the function
min{uj兩j ⫽ 1, . . . , r} is e-subadditive but not subadditive.
(Indeed, it is superadditive.)
Consider now a location model f(X:P) ⫽ g(T(X:P)),
where T(X:P) satisfies the distance-like assumption, and g
is isotone and e-subadditive. From the distance-like as-
sumption we have
T j共X:P兲 ⭐ T j共X:P⬘兲 ⫹ S j共P:P⬘兲,
for all j ⫽ 1, . . . , r. Let ␭(P:P⬘) ⫽ max{Sj(P:P⬘)兩j ⫽
1, . . . , r}. Then,
T j共X:P兲 ⭐ T j共X:P⬘兲 ⫹ ␭ 共P:P⬘兲,
for all j ⫽ 1, . . . , r. Applying the isotonicity of g, we
obtain
g共T共X:P兲兲 ⭐ g共T共X:P⬘兲 ⫹ ␭ 共P:P⬘兲e兲.
Finally, from the e-subadditivity we conclude
g共T共X:P兲兲 ⭐ g共T共X:P⬘兲兲 ⫹ g共 ␭ 共P:P⬘兲e兲.
g共T共X:P⬘兲兲 ⭐ g共T共X:P兲兲 ⫹ g共 ␭ 共P:P⬘兲e兲.
Therefore, we obtain the following error bound:
兩f共X:P兲 ⫺ f共X:P⬘兲兩 ⭐ g共 ␭ 共P:P⬘兲e兲.
As an example consider the obnoxious facility location
model, where the objective is to maximize the minimum
distance between the customers and their respective near-
est servers. In this model,
f共X:P兲 ⫽ min兵D共X, p i 兲兩i ⫽ 1, . . . , m其.
Set r ⫽ m, Ti(X:P) ⫽ D(X, pi), and Si(P:P⬘) ⫽ d( pi, p⬘i) for
i ⫽ 1, . . . , r.
Therefore, an error bound is given by

␭ 共P:P⬘兲 ⫽ max兵d共 p i , p⬘i 兲兩i ⫽ 1, . . . , r其.
It is worth mentioning that the same error bound holds for
a more general model defined by
f共X:P兲 ⫽ min{min兵D共X, p i 兲兩i ⫽ 1, . . . , m其,
min兵d共 x j , x t 兲兩j, t ⫽ 1, . . . , n; j ⫽ t其}.
3.7. Asymmetric Distances and Error Bounds
In the above discussion we have assumed that the distance
function d( , ) is symmetric with respect to its two argu-
ments. This assumption was made as part of the distance-
like assumption, where we required that S(P:P⬘) ⫽ S(P⬘:P)
for all pairs of subsets P and P⬘.
The above symmetry assumption is certainly not justified
in cases of one-way streets, up- and down-hill travel, or
where traffic is more congested one way than the other. To
overcome this difficulty we note that the above models can
be easily modified as follows when S(P:P⬘) and S(P⬘:P) are
not identical. The only modification needed is their re-
placement by the vector S*(P:P⬘) whose jth entry is the
maximum of the jth entry in S(P:P⬘) and S(P⬘:P) for all j.
It is easy to check that, with this modification, all the above
results are now valid for this asymmetric case as well.
4. CONCLUSIONS
In this section we summarize our work and speculate
about possible extensions and generalizations.
In §1 we introduced the problem of demand point ag-
gregation for location models and discussed related litera-
ture, including the idea of an aggregation error bound, an
upper bound on the absolute error, 兩f(X:P) ⫺ f(X:P⬘)兩,
which holds for all X. In §2 we presented error bounds in
Table 1 and discussed the use of the bounds for a class of
location models; we also outlined some generalizations,
including replacing weights by concave, nondecreasing
functions of the distances. In §3 we presented our theory
for deriving error bounds, including error bounds for mod-
els not listed in Table 1. We exploited the ideas of the
triangle inequality with the SAND properties, subadditiv-
ity, and monotonicity to develop a general form of the
location model and its associated error bound. We also
showed that the idea of order functions allowed us to cap-
ture a class of location models in a single form. In addi-
tion, we showed how to obtain error bounds for certain
combinations of location models, which we call hyper-
SAND models. We also pointed out that the error bound
methodology is easily generalized to allow for directed net-
works where we do not have d( x, y) ⫽ d( y, x) for all x and
y.
We note there are a number of network location models
that involve locating “structures.” Hakimi et al. (1993)
consider a class of such models with “center” or “median”
objectives where the structure can be one or more of any
of the following: points in the network, partial arcs, full
arcs, paths, or subtrees. Tamir and Lowe (1992) also con-
sider several of these problems when the underlying net-
FRANCIS, LOWE, AND TAMIR / 305
work is a tree. An examination of our error bound
derivations shows we assume very little about X. In fact, X
can be any one of these structures and the error bound
results still go through.
Also, models have appeared in the literature, e.g., Ber-
man et al. (1995), where a demand “facility” is a path, and
the path is served by a closest new facility. For our pur-
poses, we assume that the distance from a serving facility
to a demand path is the distance to the closest point in the
path. For median and center versions of these problems, it
is possible to derive error bounds using our approach.
Covering models have no distances in their objectives,
and we have no error bounds for such models. However,
their well-known close connection to center problems (e.g.,
see Iyer and Ratliff 1990) suggests it may be possible to
obtain error bounds for them.
Because our work is on objective function approxima-
tion, the following comment is in order. In exact optimiza-
tion, an optimal solution is unaffected by applying any
monotone transformation to the original objective func-
tion, e.g., squaring a nonnegative objective function has no
effect on the optimal set. This is not the case whenever
optimization is not feasible or tractable for the original
model and one must use approximations. Approximate so-
lutions, as well as error bounds, are crucially dependent on
the particular representation of the objective function. In
particular, in our context, if we apply a monotone transfor-
mation that does not preserve subadditivity, then uniform
error bounds might not be achievable.
The process we have followed in this paper is to begin
with a location model and then obtain an error bound. It
might be interesting to consider reversing the process. Per-
haps we could state an error bound model, some function
of P and P⬘, and then determine if there exists a location
model with this error bound. Such results might be helpful
in trying to further classify models with common error
bounds. Ideally, it would be desirable to have necessary
and sufficient conditions for a model to have a given error
bound.
ACKNOWLEDGMENTS
This research is sponsored in part by the National Science
Foundation, Grant DMI-9522882.
We are happy to acknowledge also the constructive
comments of the referees. In particular, we appreciate the
suggestion that risk-pooling is another positive reason to
do aggregation.
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