Hub location and the design of capacitated intermodal hub networks focusing on costs

In today's competitive environment, in order to decrease unit transportation costs, most firms in the cargo delivery sector use different transportation modes and different types of vehicles within their intermodal hub networks. Hub location and hub network design problems considering different transportation modes and different types of vehicles have not been addressed in the literature. In this study, we allow using different transportation modes and different types of vehicles in the hub network to be designed. We determine the location of the hubs, the allocation of demand nodes to these hubs, the hub links to be established between the hubs, and the type and number of vehicles that will serve on these hub links. The objective of the problem is to minimize total costs including the hub establishment costs, transportation costs, vehicle operating costs, vehicle renting costs, and material handling costs. A mixed-integer programming model is developed and a local search based heuristic algorithm is proposed for the solution of this problem. The heuristic algorithm is tested on the Turkish network and CAB data sets. The values of the problem parameters are determined based on the interviews made with the three largest cargo companies operating in Turkey. Extensive computational analyses are conducted in order to observe the effects of changes in the various problem parameters on the resulting hub networks. Keywords: hub location, hub network design, service network design, intermodal transportation networks.