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Economies of Scale in Hub & Spoke Network Design Models: We Have It All Wrong

In: Perspectives on Operations Research

Author

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  • Alf Kimms

    (TU Bergakademie Freiberg)

Abstract

The hub & spoke network design problem is a strategic logistics planning problem with applications for airlines, telecommunication companies, computer networks, postal services, and trucking companies, for example. Basically, the problem in all these applications is that for a given set V = 1,... , n of nodes (airports, computers, post offices, depots, ...) goods must be transported between possibly every pair of nodes. Direct connections between every pair of nodes would result in n(n − 1) linkages which is impractically high and economically non-profitable. Consider, for instance, an airline that serves several airports worldwide. Offering nonstop flights between every pair of airports would require a huge amount of planes and crews and many empty seats on board could be observed for many connections. In such settings, it turns out to be reasonable to install one or more so-called hub locations where direct links are then available to hub nodes as indicated in figure 1 where nodes 3, 6, and 9 are assumed to be hubs. Transporting goods from, say, node 1 to node 11, can then be done via hubs 3 and 6.

Suggested Citation

  • Alf Kimms, 2006. "Economies of Scale in Hub & Spoke Network Design Models: We Have It All Wrong," Springer Books, in: Martin Morlock & Christoph Schwindt & Norbert Trautmann & Jürgen Zimmermann (ed.), Perspectives on Operations Research, pages 293-317, Springer.
    • Handle: RePEc:spr:sprchp:978-3-8350-9064-4_17
    DOI: 10.1007/978-3-8350-9064-4_17
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    Citations

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    Cited by:

    1. Dan Liu & Zhenghong Deng & Qipeng Sun & Yong Wang & Yinhai Wang, 2019. "Design and Freight Corridor-Fleet Size Choice in Collaborative Intermodal Transportation Network Considering Economies of Scale," Sustainability, MDPI, vol. 11(4), pages 1-19, February.
    2. James F. Campbell & Morton E. O'Kelly, 2012. "Twenty-Five Years of Hub Location Research," Transportation Science, INFORMS, vol. 46(2), pages 153-169, May.
    3. Dhyani, Sneha & Jayaswal, Sachin & Sinha, Ankur & Vidyarthi, Navneet, 2019. "Alternate Second Order Conic Programming Reformulations for Hub Location with Capacity Selection under Demand," IIMA Working Papers WP 2018-12-04, Indian Institute of Management Ahmedabad, Research and Publication Department.
    4. Jayaswal, Sachin & Vidyarthi, Navneet, 2023. "Multiple allocation hub location with service level constraints for two shipment classes," European Journal of Operational Research, Elsevier, vol. 309(2), pages 634-655.
    5. Taherkhani, Gita & Alumur, Sibel A., 2019. "Profit maximizing hub location problems," Omega, Elsevier, vol. 86(C), pages 1-15.
    6. 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.
    7. Real, Luiza Bernardes & Contreras, Ivan & Cordeau, Jean-François & de Camargo, Ricardo Saraiva & de Miranda, Gilberto, 2021. "Multimodal hub network design with flexible routes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).
    8. 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.
    9. Wang Bo & Mariya Grygorak & Viktor Voitsehovskiy & Sergiy Lytvynenko & Tetiana Gabrielova & Dmytro Bugayko & Yatchko Ivanov & Andrija Vidovic, 2019. "Cargo Flows Management Model of Network Air Carrier," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 118-124.
    10. 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).
    11. Mrabti, Nassim & Hamani, Nadia & Boulaksil, Youssef & Amine Gargouri, Mohamed & Delahoche, Laurent, 2022. "A multi-objective optimization model for the problems of sustainable collaborative hub location and cost sharing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    12. Mehmet R. Taner & Bahar Y. Kara, 2016. "Endogenous Effects of Hubbing on Flow Intensities," Networks and Spatial Economics, Springer, vol. 16(4), pages 1151-1181, December.
    13. Ghaffarinasab, Nader & Çavuş, Özlem & Kara, Bahar Y., 2023. "A mean-CVaR approach to the risk-averse single allocation hub location problem with flow-dependent economies of scale," Transportation Research Part B: Methodological, Elsevier, vol. 167(C), pages 32-53.
    14. Wang, Xinchang & Meng, Qiang, 2017. "Discrete intermodal freight transportation network design with route choice behavior of intermodal operators," Transportation Research Part B: Methodological, Elsevier, vol. 95(C), pages 76-104.
    15. Masaeli, Mobina & Alumur, Sibel A. & Bookbinder, James H., 2018. "Shipment scheduling in hub location problems," Transportation Research Part B: Methodological, Elsevier, vol. 115(C), pages 126-142.
    16. de Sá, Elisangela Martins & de Camargo, Ricardo Saraiva & de Miranda, Gilberto, 2013. "An improved Benders decomposition algorithm for the tree of hubs location problem," European Journal of Operational Research, Elsevier, vol. 226(2), pages 185-202.
    17. Wu, Jiang & Zhang, Pei-wen & Wang, Yu & Shi, Jim (Junmin), 2022. "Integrated aviation model and metaheuristic algorithm for hub-and-spoke network design and airline fleet planning," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    18. Martine Mostert & An Caris & Sabine Limbourg, 2018. "Intermodal network design: a three-mode bi-objective model applied to the case of Belgium," Flexible Services and Manufacturing Journal, Springer, vol. 30(3), pages 397-420, September.
    19. Lüer-Villagra, Armin & Marianov, Vladimir, 2013. "A competitive hub location and pricing problem," European Journal of Operational Research, Elsevier, vol. 231(3), pages 734-744.

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