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Hub location under competition

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  • Mahmutogullari, Ali Irfan
  • Kara, Bahar Y.

Abstract

Hubs are consolidation and dissemination points in many-to-many flow networks. Hub location problem is to locate hubs among available nodes and allocate non-hub nodes to these hubs. The mainstream hub location studies focus on optimal decisions of one decision-maker with respect to some objective(s) even though the markets that benefit hubbing are oligopolies. Therefore, in this paper, we propose a competitive hub location problem where the market is assumed to be a duopoly. Two decision-makers (or firms) sequentially decide locations of their hubs and then customers choose one firm with respect to provided service levels. Each decision-maker aims to maximize his/her own market share. We propose two problems for the leader (former decision-maker) and follower (latter decision-maker): (r|Xp)hub−medianoid and (r|p)hub−centroid problems, respectively. Both problems are proven to be NP-complete. Linear programming models are presented for these problems as well as exact solution algorithms for the (r|p)hub−centroid problem. The performance of models and algorithms are tested by computational analysis conducted on CAB and TR data sets.

Suggested Citation

  • Mahmutogullari, Ali Irfan & Kara, Bahar Y., 2016. "Hub location under competition," European Journal of Operational Research, Elsevier, vol. 250(1), pages 214-225.
    • Handle: RePEc:eee:ejores:v:250:y:2016:i:1:p:214-225
    DOI: 10.1016/j.ejor.2015.09.008
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    13. Milad , Keshvari Fard & Laurent, Alfandari, 2018. "Trade-offs between the Stepwise Cost Function and its Linear Approximation for the Modular Hub Location Problem," ESSEC Working Papers WP1805, ESSEC Research Center, ESSEC Business School.
    14. Tiwari, Richa & Jayaswal, Sachin & Sinha, Ankur, 2019. "Competitive Hub Location Problems: Model and Solution Approaches," IIMA Working Papers WP 2019-12-02, Indian Institute of Management Ahmedabad, Research and Publication Department.
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    20. Jian Zhou & Kexin Xu & Yuxiu Zhao & Haoran Zheng & Zhengnan Dong, 2021. "Hub-and-Spoke Logistics Network Considering Pricing and Co-Opetition," Sustainability, MDPI, vol. 13(17), pages 1-21, September.
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    22. Mohammadi, Mehrdad & Jula, Payman & Tavakkoli-Moghaddam, Reza, 2019. "Reliable single-allocation hub location problem with disruptions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 123(C), pages 90-120.

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