Hierarchical hub location problem for freight network design

In order to minimise the total cost of the logistics part of the network design, it is necessary to use the hub-and-spoke network structure to achieve economies of scale in transportation. Most of the models used to design hub networks have considered a single level of hub type, but they do not reflect the hub scale by freight volume in the network. The aim of this study was to design a hub-and-spoke network with hierarchical hubs and develop a model for the evaluation of logistics systems. The developed model determined the number of each level of hubs to be opened, identified the locations of these hubs, and allocated the demand nodes to the hubs. In this study, the development of algorithms for solving problems was also investigated. This model provides new insights and approaches into these research areas. The proposed algorithm contributes to the more generalised field of combinatorial optimisation problems, particularly for the problems associated with the design of a hierarchical hub network.