Hub Location Problems with Profit Considerations

This thesis studies profit maximizing hub location problems. These problems seek to find the optimal number and locations of hubs, allocations of demand nodes to these hubs, and routes of flows through the network to serve a given set of demands between origin-destination pairs while maximizing total profit. Taking revenue into consideration, it is assumed that a portion of the demand can remain unserved when it is not profitable to be served. Potential applications of these problems arise in the design of airline passenger and freight transportation networks, truckload and less-than-truckload transportation, and express shipment and postal delivery. Firstly, mathematical formulations for different versions of profit maximizing hub location problems are developed. Alternative allocation strategies are modeled including multiple allocation, single allocation, and $r$-allocation, as well as allowing for the possibility of direct connections between non-hub nodes. Extensive computational analyses are performed to compare the resulting hub networks under different models, and also to evaluate the solution potential of the proposed models on commercial solvers with emphasis on the effect of the choice of parameters. Secondly, revenue management decisions are incorporated into the profit maximizing hub location problems by considering capacities of hubs. In this setting, the demand of commodities are segmented into different classes and there is available capacity at hubs which is to be allocated to these different demand segments. The decision maker needs to determine the proportion of each class of demand to serve between origin-destination pairs based on the profit to be obtained from satisfying this demand. A strong mixed-integer programming formulation of the problem is presented and Benders-based algorithms are proposed to optimally solve large-scale instances of the problem. A new methodology is developed to strengthen the Benders optimality cuts by decomposing the subproblem in a two-phase fashion. The algorithms are enhanced by the integration of improved variable fixing techniques. Computational results show that large-scale instances with up to 500 nodes and 750,000 commodities of different demand segments can be solved to optimality, and that the proposed algorithms generate cuts that provide significant speedups compared to using Pareto-optimal cuts. As precise information on demand may not be known in advance, demand uncertainty is then incorporated into the profit maximizing hub location problems with capacity allocation, and a two-stage stochastic program is developed. The first stage decision is the locations of hubs, while the assignment of demand nodes to hubs, optimal routes of flows, and capacity allocation decisions are made in the second stage. A Monte-Carlo simulation-based algorithm is developed that integrates a sample average approximation scheme with the proposed Benders decomposition algorithm. Novel acceleration techniques are presented to improve the convergence of the algorithm. The efficiency and robustness of the algorithm are evaluated through extensive computational experiments. Instances with up to 75 nodes and 16,875 commodities are optimally solved, which is the largest set of instances that have been solved exactly to date for any type of stochastic hub location problems. Lastly, robust-stochastic models are developed in which two different types of uncertainty including stochastic demand and uncertain revenue are simultaneously incorporated into the capacitated problem. To embed uncertain revenues into the problem, robust optimization techniques are employed and two particular cases are investigated: interval uncertainty with a max-min criterion and discrete scenarios with a min-max regret objective. Mixed integer programming formulations for each of these cases are presented and Benders-based algorithms coupled with sample average approximation scheme are developed. Inspired by the repetitive nature of sample average approximation scheme, general techniques for accelerating the algorithms are proposed and instances involving up to 75 nodes and 16,875 commodities are solved to optimality. The effects of uncertainty on optimal hub network designs are investigated and the quality of the solutions obtained from different modeling approaches are compared under various parameter settings. Computational results justify the need for embedding both sources of uncertainty in decision making to provide robust solutions

INTEGRATED HUB LOCATION AND CAPACITATED VEHICLE ROUTING PROBLEM OVER INCOMPLETE HUB NETWORKS

Hub location problem is one of the most important topics encountered in transportation and logistics management. Along with the question of where to position hub facilities, how routes are determined is a further challenging problem. Although these two problems are often considered separately in the literature, here, in this study, the two are analyzed together. Firstly, we relax the restriction that a vehicle serves between each demand center and hub pair and propose a mixed-integer mathematical model for the single allocation p-hub median and capacitated vehicle routing problem with simultaneous pick-up and delivery. Moreover, while many studies in hub location problem literature assume that there is a complete hub network structure, we also relax this assumption and present the aforementioned model over incomplete hub networks. Computational analyses of the proposed models were conducted on various instances on the Turkish network. Results indicate that the different capacity levels of vehicles have an important impact on optimal hub locations, hub arc networks, and routing design

Benders Decomposition for Profit Maximizing Hub Location Problems with Capacity Allocation

This paper models capacity allocation decisions within profit maximizing hub location problems to satisfy demand of commodities from different market segments. A strong deterministic formulation of the problem is presented and two exact algorithms based on a Benders reformulation are described to solve large-size instances of the problem. A new methodology is developed to strengthen the Benders optimality cuts by decomposing the subproblem in a two-phase fashion. The algorithms are enhanced by the integration of improved variable fixing techniques. The deterministic model is further extended by considering uncertainty associated with the demand to develop a two-stage stochastic program. To solve the stochastic version, a Monte-Carlo simulation-based algorithm is developed that integrates a sample average approximation scheme with the proposed Benders decomposition algorithms. Novel acceleration techniques are presented to improve the convergence of the algorithms proposed for the stochastic version. The efficiency and robustness of the algorithms are evaluated through extensive computational experiments. Computational results show that large-scale instances with up to 500 nodes and three demand segments can be solved to optimality, and that the proposed algorithms generate cuts that provide significant speedups compared to using Pareto-optimal cuts. The proposed two-phase methodology for solving the Benders subproblem as well as the variable fixing and acceleration techniques can be used to solve other discrete location and network design problems

Hub Network Design Problem with Capacity, Congestion and Stochastic Demand Considerations

Our study introduces the hub network design problem with congestion, capacity, and stochastic demand considerations (HNDC), which generalizes the classical hub location problem in several directions. In particular, we extend state-of-the-art by integrating capacity acquisition decisions and congestion cost effect into the problem and allowing dynamic routing for origin-destination pairs. Connecting strategic and operational level decisions, HNDC jointly decides hub locations and capacity acquisitions by considering the expected routing and congestion costs. A path-based mixed-integer second-order cone programming (SOCP) formulation of the HNDC is proposed. We exploit SOCP duality results and propose an exact algorithm based on Benders decomposition and column generation to solve this challenging problem. We use a specific characterization of the capacity-feasible solutions to speed up the solution procedure and develop an efficient branch-and-cut algorithm to solve the master problem. We conduct extensive computational experiments to test the proposed approach’s performance and derive managerial insights based on realistic problem instances adapted from the literature. In particular, we found that including hub congestion costs, accounting for the uncertainty in demand, and whether the underlying network is complete or incomplete have a significant impact on hub network design and the resulting performance of the system

A new bi-objective model of the urban public transportation hub network design under uncertainty

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Stochastic hub and spoke networks

Transportation systems such as mail, freight, passenger and even telecommunication systems most often employ a hub and spoke network structure since correctly designed they give a strong balance between high service quality and low costs resulting in an economically competitive operation. In addition, consumers are increasingly demanding fast and reliable transportation services, with services such as next day deliveries and fast business and pleasure trips becoming highly sought after. This makes finding an efficient design of a hub and spoke network of the utmost importance for any competing transportation company. However real life situations are complicated, dynamic and often require responses to many different fixed and random events. Therefore modeling the question of what is an optimal hub and spoke network structure and finding an optimal solution is very difficult. Due to this, many researchers and practitioners alike make several assumptions and simplifications on the behavior of such systems to allow mathematical models to be formulated and solved optimally or near optimally within a practical timeframe. Some assumptions and simplifications can however result in practically poor network design solutions being found. This thesis contributes to the research of hub and spoke networks by introducing new stochastic models and fast solution algorithms to help bridge the gap between theoretical solutions and designs that are useful in practice. Three main contributions are made in the thesis. First, in Chapter 2, a new formulation and solution algorithms are proposed to find exact solutions to a stochastic p-hub center problem. The stochastic p-hub center problem is about finding a network structure, where travel times on links are stochastic, which minimizes the longest path in the network to give fast delivery guarantees which will hold for some given probability. Second, in Chapter 3, the stochastic p-hub center problem is looked at using a new methodological approach which gives more realistic solutions to the network structures when applied to real life situations. In addition a new service model is proposed where volume of flow is also accounted for when considering the stochastic nature of travel times on links. Third, in Chapter 4, stochastic volume is considered to account for capacity constraints at hubs and, de facto, reduce the costs embedded in excessive hub volumes. Numerical experiments and results are conducted and reported for all models in all chapters which demonstrate the efficiency of the new proposed approaches

Sea Container Terminals

Due to a rapid growth in world trade and a huge increase in containerized goods, sea container terminals play a vital role in globe-spanning supply chains. Container terminals should be able to handle large ships, with large call sizes within the shortest time possible, and at competitive rates. In response, terminal operators, shipping liners, and port authorities are investing in new technologies to improve container handling infrastructure and operational efficiency. Container terminals face challenging research problems which have received much attention from the academic community. The focus of this paper is to highlight the recent developments in the container terminals, which can be categorized into three areas: (1) innovative container terminal technologies, (2) new OR directions and models for existing research areas, and (3) emerging areas in container terminal research. By choosing this focus, we complement existing reviews on container terminal operations

Multi-period sales districting problem

In the sales districting problem, we are given a set of customers and a set of salesmen in some area. The salesmen have to provide services at the customers' locations to satisfy their requirements. The task is to allocate each customer to one salesman, which partitions the set of customers into subsets, called districts. Each district is expected to have approximately equal workload and travel time for each salesman to promote fairness among them. Also, the districts should be geographically compact since they are more likely to reduce unnecessary travel time, which is desirable for economic reasons. Moreover, each customer can require recurring services with different visiting frequencies such as every week or two weeks during a planning horizon. This problem is called the `Multi-Period Sales Districting Problem (MPSDP)' and can be found typically in regular engineering maintenance and sales promotion. In addition to determining the sales districts, we also want to get valid weekly visiting schedules for the salesmen corresponding to the customers' visiting requirements. The schedules should result in weekly districts with the following desirable characteristics: each weekly district should be balanced in weekly workload and geographically compact. The compactness in the schedules provides benefits when a salesman has to deal with short-term requests from customers or change a visiting plan during the week. Namely, the salesman can postpone a visit to another day if necessary, without increasing the travel time too much compared to the original schedule. This is beneficial when the salesman has to deal with unexpected situations, for example, road maintenance, traffic jams, or short notice of time windows from customers. Although the problem is very practical, it has been studied only recently. Since most of the previous literature on general scheduling problems did not consider compactness, a few recent studies have begun to focus on solving the scheduling part of the problem. The purpose of this research is to develop a more sophisticated exact solution approach as well as an efficient high-quality heuristic to solve the scheduling part. Eventually, with an effective elaborate method to solve the scheduling part, we aim for a robust algorithm to solve the districting and scheduling part of the problem simultaneously. This thesis contains three main parts. The first part introduces the problem and provides a mixed-integer linear programming formulation for only the scheduling part and formulation for the whole problem. The second part presents solution approaches, including an exact method and a heuristic, for only the scheduling part. The last part is dedicated to further development of a successful approach from the second part to solve the districting and scheduling part of the problem simultaneously. For solving the scheduling part, Benders' decomposition is developed as a new exact solution method. The linear relaxation of the problem is strengthened by adding several Benders' cuts derived from fractional solutions at the beginning of the algorithm. Moreover, a good-quality integer solution derived from a location-allocation heuristic is used to generate cuts beforehand, which significantly improves the upper bound of the objective function value. Nondominated optimality cuts are implemented to guarantee the strongest Benders' cuts in each iteration. Also, instead of generating a Benders' cut per iteration, we exploit the decomposable structure of the problem formulation to generate multiple cuts per iteration, resulting in a noticeable improvement in the lower bound of the objective function value. In the classical Benders' decomposition, one of the main factors that slow down the algorithm is that one has to solve the integer programmes from scratch in each iteration. To alleviate this problem, a modern implementation creates only one branch-and-bound tree and adds Benders' cuts derived from a solution in each node in a solution cut pool. This method is called branch-and-Benders' cut. To assess the suitability of the algorithm, we compare its performance on small data instances that contain 30$-$50 customers to the Benders' algorithm in CPLEX and show that our algorithm is highly competitive. Since an exact solution method usually struggles to solve realistic large data instances, a meta-heuristic called tabu search is proposed. A high-quality initial solution to start the algorithm is derived from the location-allocation heuristic. Three different neighbourhoods based on information about week centres or customers' week patterns are created within which we search for the best solution. An infeasible solution is allowed in the search to expand the search space. During the search, the size of a whole neighbourhood can be excessively large, so we limit the search to promising areas of the solution space to save computational time. Also, a surrogate objective value is used to save on computational time in cases when computing the real objective value is too time-consuming. Although the tabu search defines a list of forbidden moves to avoid the cycle of solutions, the algorithm can still struggle to avoid being trapped around a local optimum. Therefore, a diversification scheme is proposed for such cases. The algorithm is also accelerated by combining all neighbourhoods and selecting the appropriate neighbourhood for each iteration by a roulette wheel selection. It shows impressive results in small data instances that contain 30$-$50 customers. The comparison with built-in heuristics in CPLEX confirms the robustness of the tabu search algorithm. Finally, we combine the tabu search algorithm with our developed Benders' decomposition. Numerical results show that the tabu search method improves the upper bound of the Benders' decomposition algorithm. However, the overall performance is not satisfying so the combination of these two techniques still requires more proper development. As the tabu search algorithm performs well on the scheduling part, it is extended to solve the whole problem, i.e., the districting and scheduling part at the same time. Computational results on large data instances, which contain between 100 and 300 customers, demonstrate its capacity to derive a high-quality solution within a reasonable amount of time, i.e., less than 17 minutes. At the same time, the Benders' decomposition algorithm in CPLEX, which is a benchmark in this case, and the built-in heuristics in CPLEX cannot even find any feasible integer solution for most of the instances within an hour. Importantly, there is a conflict between the districting part and the scheduling part so we recommend solving both parts simultaneously for tackling the MPSDP. The multi-period sales districting problem is highly practical and challenging to solve. To the best of our knowledge, we are the first to propose a single integrated solution approach to solve the whole problem. Further studies including adding more realistic planning requirements into consideration and effective solution approaches to solve the problem are still required

Robust optimisation of dry port network design in the container shipping industry under uncertainty

PhD ThesisThe concept of dry port has attracted the attention of many researchers in the field of containerised transport industry over the past few decades. Previous research on dry port container network design has dealt with decision-making at different levels in an isolated manner. The purpose of this research is to develop a decision-making tool based on mathematical programming models to integrate strategic level decisions with operational level decisions. In this context, the strategic level decision making comprises the number and location of dry ports, the allocation of customers demand, and the provision of arcs between dry ports and customers within the network. On the other hand, the operational level decision making consists of containers flow, the selection of transportation modes, empty container repositioning, and empty containers inventory control. The containers flow decision involves the forward and backward flow of both laden and empty containers. Several mathematical models are developed for the optimal design of dry port networks while integrating all these decisions. One of the key aspects that has been incorporated in this study is the inherent uncertainty of container demands from end customers. Besides, a dynamic setting has to be adopted to consider the inevitable periodic fluctuation of demands. In order to incorporate the abovementioned decision-making integration with uncertain demands, several models are developed based on twostage stochastic programming approach. In the developed models, the strategic decisions are made in the first stage while the second-stage deals with operational decisions. The models are then solved through a robust sample average approximation approach, which is improved with the Benders Decomposition method. Moreover, several acceleration algorithms including multi-cut framework, knapsack inequalities, and Pareto-optimal cut scheme are applied to enhance the solution computational time. The proposed models are applied to a hypothetical case of dry port container network design in North Carolina, USA. Extensive numerical experiments are conducted to validate the dry port network design models. A large number of problem instances are employed in the numerical experiments to certify the capability of models. The quality of generated solutions is examined via a statistical validation procedure. The results reveal that the proposed approach can produce a reliable dry port container network under uncertain environment. Moreover, the experimental results underline the sensitivity of the configuration of the network to the inventory holding costs iii and the value of coefficients relating to model robustness and solution robustness. In addition, a number of managerial insights are provided that may be widely used in container shipping industry: that the optimal number of dry ports is inversely proportional to the empty container holding costs; that multiple sourcing is preferable when there are high levels of uncertainty; that rail tends to be better for transporting laden containers directly from seaports to customers with road being used for empty container repositioning; service level and fill rate improve when the design targets more robust solutions; and inventory turnover increases with high levels of holding cost; and inventory turnover decreases with increasing robustness