Multiple allocation hub-and-spoke network design under hub congestion

Authors:
R. S. de Camargo;G. Miranda Jr.;R. P. M. Ferreira;H. P. Luna
Affiliations:
Department of Industrial Engineering, Federal University of Minas Gerais, Brazil;Department of Industrial Engineering, Federal University of Minas Gerais, Brazil;Department of Computer Science, Pontifical Catholic University of Minas Gerais, Brazil;Computer Science Institute, Federal University of Alagoas, Brazil
Venue:
Computers and Operations Research
Year:
2009

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Abstract

The multiple allocation hub-and-spoke network design under hub congestion problem is addressed in this paper. A non-linear mixed integer programming formulation is proposed, modeling the congestion as a convex cost function. A generalized Benders decomposition algorithm has been deployed and has successfully solved standard data set instances up to 81 nodes. The proposed algorithm has also outperformed a commercial leading edge non-linear integer programming package. The main contribution of this work is to establish a compromise between the transportation cost savings induced by the economies of scale exploitation and the costs associated with the congestion effects.