The hub location and routing problem

In this paper, we consider the hub location and routing problem in which the hub locations and the service types for the routes between demand points are determined together. Rather than aggregating the demand for the services, flows from an origin to different destination points are considered separately. For each origin–destination pair, one-hub-stop, two-hub-stop and, when permitted, direct services are considered. In the system considered, the hubs interact with each other and the level of interaction between them is determined by the two-hub-stop service routes. A mathematical formulation of the problem and an algorithm solving the hub location and the routing subproblems separately in an iterative manner are presented. Computational experience with four versions of the proposed algorithm differing in the method used for finding starting solutions is reported.