Title: Hub location under uncertainty: a minimax regret model for the capacitated problem with multiple allocations

Authors: Iman Kazemian; Samin Aref

Addresses: Department of Industrial Engineering, College of Engineering, University of Tehran, North Kargar, Tehran, P.O. Box 4563-11155, Iran ' Department of Computer Science, University of Auckland, Auckland, Private Bag 92019, New Zealand; Computer Science Practice Pathway Group, Unitec Institute of Technology, Auckland, Private Bag 92025, New Zealand

Abstract: In this paper, the capacitated hub location problem is formulated by a minimax regret model, which takes into account uncertain setup cost and demand. We focus on hub location with multiple allocations as a strategic problem requiring one definite solution. Investigating how deterministic models may lead to suboptimal solutions, we provide an efficient formulation method for the problem. A computational analysis is performed to investigate the impact of uncertainty on the location of hubs. The suggested model is also compared with an alternative method, seasonal optimisation, in terms of efficiency and practicability. The results indicate the importance of incorporating stochasticity and variability of parameters in solving practical hub location problems. Applying our method to a case study derived from an industrial food production company, we solve a logistical problem involving seasonal demand and uncertainty. The solution yields a definite hub network configuration to be implemented throughout the planning horizon.

Keywords: hub location; uncertain demand; uncertain setup cost; capacitated; multiple allocations; minimax regret model; case study; robust optimisation; re-configuration cost; seasonal demand.

DOI: 10.1504/IJSCIM.2017.086371

International Journal of Supply Chain and Inventory Management, 2017 Vol.2 No.1, pp.1 - 19

Received: 21 Sep 2015
Accepted: 19 Oct 2016

Published online: 04 Sep 2017 *

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