A heuristic approach to the stochastic capacitated single allocation hub location problem with Bernoulli demands

Hubs are critical components of transportation and distribution systems, and hub networks play a special role in freight and passenger transportation services worldwide. This paper studies a capacitated single allocation hub location problem with Bernoulli demands. Since the origin-destination (OD) demands are stochastic in nature, and the nodes are allocated to hubs before knowing their realized values, the actual total demand allocated to each hub is uncertain. Therefore, demand can exceed the capacity of hubs, rendering a need for outsourcing. The problem is studied under two distinct outsourcing policies, namely the facility and customer outsourcing. Mathematical models are developed for each case as two-stage stochastic programs. Deterministic equivalent formulations are obtained for problems, assuming a homogeneous demand distribution for all OD pairs. A Tabu Search-based algorithm is presented as a solution approach to deal with large problem instances. Extensive computational tests demonstrate the outstanding performance of the developed models and the metaheuristic procedure in terms of solution quality and computational time. The relevance of using stochastic programming approach for the problems is demonstrated via computational results. This study also reports solutions for problems with 200 nodes for the first time.(c) 2023 Elsevier B.V. All rights reserved.

Automated summary

This paper studies a capacitated single allocation hub location problem with Bernoulli demands. Mathematical models are developed and a Tabu Search-based algorithm is presented to obtain solutions. The relevance of using stochastic programming approach for the problems is demonstrated.