Title: The single allocation hub location problem: a robust optimisation approach

Authors: Nader Ghaffari-Nasab; Mehdi Ghazanfari; Ali Saboury; Mehdi Fathollah

Addresses: Department of Industrial Engineering, Iran University of Science and Technology, Narmak, Tehran, Iran ' Department of Industrial Engineering, Iran University of Science and Technology, Narmak, Tehran, Iran ' Department of Industrial Engineering, Iran University of Science and Technology, Narmak, Tehran, Iran ' Logistics and Supply Chain Research Group, Institute for Trade Studies and Research, North Kargar St. Tehran, Iran

Abstract: Design of hub-and-spoke networks or the hub location problem is one of the most important problems in operational research and has many applications in different areas of transportation, logistics, and telecommunications. In this paper, a relatively new version of the single allocation hub location problem is addressed, in which quantity of the commodity flows between pairs of customer nodes are of stochastic nature. The objective here is to determine the number, location, and capacity of the hubs and also to allocate the customers to these hubs in such a way that transferring all the commodities in the network is ensured with a very high probability (capacity constraints associated with the hubs are not violated). At the same time, total expected system-wide costs will be minimised. A robust optimisation approach is employed to model the problem with a standard optimisation package being used to solve it. Results obtained via numerical experiments show the capability of the presented robust model to immunise the system against violation of capacity constraints with a relatively small cost increase, known as the robustness cost. [Received 14 October 2012; Revised 16 September 2013; Accepted 21 September 2013]

Keywords: hub location; robust optimisation; mathematical modelling; logistics; hub-and-spoke networks; network design; commodity flows; hub capacity; hub numbers; capacity constraints.

DOI: 10.1504/EJIE.2015.068648

European Journal of Industrial Engineering, 2015 Vol.9 No.2, pp.147 - 170

Available online: 02 Apr 2015 *

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