Cost-efficient network synthesis from leased lines

Given a communication demand between each pair of nodes of a network, we consider the problem of deciding what capacity to install on each edge of the network in order to minimize the building cost of the network and to satisfy a given demand between each pair of nodes. The feasible capacities that can be leased from a network provider are of a particular kind in our case. There are a few so-called basic capacities having the property that every basic capacity is an integral multiple of every smaller basic capacity. An edge can be equipped with a capacity only if it is an integer combination of the basic capacities. In addition, we treat several restrictions on the routings of the demands (length restriction, diversification) and failures of single nodes or single edges. We formulate the problem as a mixed integer linear programming problem and develop a cutting plane algorithm as well as several heuristics to solve it. We report on computational results for real-world data.