The hub location and network design problem with fixed and variable arc costs: formulation and dual-based solution heuristic

Abstract

Many air, less-than-truck load and intermodal transportation and telecommunication networks incorporate hubs in an effort to reduce total cost. These hubs function as make bulk/break bulk or consolidation/deconsolidation centres. In this paper, a new hub location and network design formulation is presented that considers the fixed costs of establishing the hubs and the arcs in the network, and the variable costs associated with the demands on the arcs. The problem is formulated as a mixed integer programming problem embedding a multicommodity flow model. The formulation can be transformed into some previously modelled hub network design problems. We develop a dual-based heuristic that exploits the multi-commodity flow problem structure embedded in the formulation. The test results indicate that the heuristic is an effective way to solve this computationally complex problem.

A literature survey of HUB location problems and methods with emphasis on the marine transportations

“…This model takes into account costs of opening hubs, hub links, spoke links, and flows shipping. Yoon and Current (2008) afterwards presented another model, which did not consider shipping cost of flows. Like HLP, several models can be extended by considering several assumptions such as allocation strategy and capacity strategy in incomplete network.…”

Simulation and optimisation of intermodal barge transport networks

“…A case study is performed in which a solution is found by means of an improvement heuristic. A hub location and network design model for a general intermodal transportation network is presented by Yoon and Current (2008). Andersen et al (2009b) formulate a service network design model to study the impact of an increased level of synchronization in intermodal rail transport on the rail efficiency and interoperability across borders.…”

Multimodal hub location and hub network design

“…Podnar et al [39] considered a new network design problem where they do not locate hubs but they decide on the links with reduced unit transportation costs. Yoon and Current [46] studied the multiple allocation hub location and hub network design problem with fixed and variable arc costs. They also considered direct connections between non-hub nodes and incurred variable arc costs associated with demand on the arcs.…”