A mixed integer programming formulation is proposed for hub-and-spoke network design in a competitive environment. It addresses the competition between a newcomer liner service provider and an existing dominating operator, both operating on hub-and-spoke networks. The newcomer company maximizes its market share-which depends on the service time and transportation cost-by locating a predefined number of hubs at candidate ports and designing its network. While general-purpose solvers do not solve instances of even small size, an accelerated Lagrangian method combined with a primal heuristic obtains promising bounds. Our computational experiments on real instances of practical size indicate superiority of our approach.
|Number of pages||14|
|Journal||Transportation Research Part E: Logistics and Transportation Review|
|Publication status||Published - Nov 2010|
- Hub-and-spoke network design
- Lagrangian relaxation
- Liner shipping
- Mixed integer programming