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Profit maximizing hub location problems

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  • Taherkhani, Gita
  • Alumur, Sibel A.

Abstract

In this paper, we study profit maximizing hub location problems. We formulate mathematical models determining the location of hubs, designing the hub networks, and routing the demand in order to maximize profit. The profit is calculated by summing the total revenue minus total cost. Total cost includes the total transportation cost, the installation cost of hubs, and the cost of operating hub links. We consider all possible allocation strategies: multiple allocation, single allocation, and r-allocation. As an extension, for each allocation strategy, we also model the cases in which direct connections between non-hub nodes are allowed. To test and evaluate the performances of the proposed models, we use two well-known data sets from the literature. We analyze the resulting hub networks under various different parameter settings.

Suggested Citation

  • Taherkhani, Gita & Alumur, Sibel A., 2019. "Profit maximizing hub location problems," Omega, Elsevier, vol. 86(C), pages 1-15.
    • Handle: RePEc:eee:jomega:v:86:y:2019:i:c:p:1-15
    DOI: 10.1016/j.omega.2018.05.016
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    3. Domínguez-Bravo, Carmen-Ana & Fernández, Elena & Lüer-Villagra, Armin, 2024. "Hub location with congestion and time-sensitive demand," European Journal of Operational Research, Elsevier, vol. 316(3), pages 828-844.
    4. Alumur, Sibel A. & Campbell, James F. & Contreras, Ivan & Kara, Bahar Y. & Marianov, Vladimir & O’Kelly, Morton E., 2021. "Perspectives on modeling hub location problems," European Journal of Operational Research, Elsevier, vol. 291(1), pages 1-17.
    5. Saldanha-da-Gama, Francisco, 2022. "Facility Location in Logistics and Transportation: An enduring relationship," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    6. Fernández, Elena & Sgalambro, Antonino, 2020. "On carriers collaboration in hub location problems," European Journal of Operational Research, Elsevier, vol. 283(2), pages 476-490.
    7. Basallo-Triana, Mario José & Bravo-Bastidas, Juan José & Contreras, Ivan & Cordeau, Jean-François & Vidal-Holguín, Carlos Julio, 2023. "Intermodal hub network design with generalized capacity constraints and non-synchronized train–truck operations," Transportation Research Part B: Methodological, Elsevier, vol. 174(C).
    8. AL Athamneh, Raed & Tanash, Moayad & Bani Hani, Dania & Rawshdeh, Mustafa & Alawin, Abdallah & Albataineh, Zaid, 2023. "Variable Neighborhood Search Algorithm for the Single Assignment Incomplete Hub Location Problem with Modular Capacities and Direct Connections," Operations Research Perspectives, Elsevier, vol. 11(C).
    9. Rahmati, Reza & Neghabi, Hossein & Bashiri, Mahdi & Salari, Majid, 2023. "Stochastic regional-based profit-maximizing hub location problem: A sustainable overview," Omega, Elsevier, vol. 121(C).
    10. Iacocca, Kathleen & Mahar, Stephen & Daniel Wright, P., 2022. "Strategic horizontal integration for drug cost reduction in the pharmaceutical supply chain," Omega, Elsevier, vol. 108(C).
    11. Ghaffarinasab, Nader & Kara, Bahar Y. & Campbell, James F., 2022. "The stratified p-hub center and p-hub maximal covering problems," Transportation Research Part B: Methodological, Elsevier, vol. 157(C), pages 120-148.
    12. Xu, Xianhao & Shen, Yaohan & (Amanda) Chen, Wanying & Gong, Yeming & Wang, Hongwei, 2021. "Data-driven decision and analytics of collection and delivery point location problems for online retailers," Omega, Elsevier, vol. 100(C).
    13. Marc Janschekowitz & Gita Taherkhani & Sibel A. Alumur & Stefan Nickel, 2023. "An alternative approach to address uncertainty in hub location," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 45(2), pages 359-393, June.

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