Hub Location, Routing, and Route Dimensioning: Strategic and Tactical Intermodal Transportation Hub Network Design

Abstract

We propose a novel hub location model that jointly eliminates some of the traditional assumptions on the structure of the network and on the discount as a result of economies of scale in an effort to better reflect real-world logistics and transportation systems. Our model extends the hub literature in various facets: instead of connecting nonhub nodes directly to hub nodes, we consider routes with stopovers; instead of connecting pairs of hubs directly, we design routes that can visit several hub nodes; rather than dimensioning pairwise connections, we dimension routes of vehicles; and rather than working with a homogeneous fleet, we use intermodal transportation. Decisions pertinent to strategic and tactical hub location and transportation network design are concurrently made through the proposed optimization scheme. An effective branch-and-cut algorithm is developed to solve realistically sized problem instances and to provide managerial insights.