This paper presents a study on reliable single and multiple allocation hub-and-spoke network design problems where disruptions at hubs and the resulting hub unavailability can be mitigated by backup hubs and alternative routes. It builds nonlinear mixed integer programming models and presents linearized formulas. To solve those difficult problems, Lagrangian relaxation and Branch-and-Bound methods are developed to efficiently obtain optimal solutions. Numerical studies of proposed solution methods on practical instances are reported, along with a few insights of system design.Key words: reliable network design; hub-and-spoke; Lagrangian Relaxation; Branch-and-
Bound
Background and MotivationThe hub-and-spoke system has been widely employed in various industrial applications.It is a fully connected network with material/information flow between any two nodes being processed at a small number of critical nodes (i.e. hubs) and moved through interhub links. Compared with the one built with the point-to-point structure, it has a much smaller number of links. Also, because traffic flows are consolidated by hubs and interhub links, significantly less operating cost can be achieved because of economies of scale.Given such advantages, industry companies including airlines, logistics companies, and telecommunications firms extensively utilize the hub-and-spoke architecture to reduce the construction and operating costs.