Solution algorithms for the capacitated single allocation hub location problem

In this paper, we present an efficient approach for solving capacitated single allocation hub location problems. We use a modified version of a previous mixed integer linear programming formulation developed by us for p-hub median problems. This formulation requires fewer variables and constraints than those traditionally used in the literature. We develop good heuristic algorithms for its solution based on simulated annealing and random descent. We use the upper bound to develop an LP-based branch and bound solution method. The problem, as we define it, finds applications in the design of postal delivery networks, particularly in the location of capacitated mail sorting and distribution centres. We test our algorithms on data obtained from this application. To the best of our knowledge, this problem has not been solved in the literature. Computational results are presented indicating the usefulness of our approach.