Profit maximization in congested hub location problems: Demand models and service level constraints

Ata Jalili Marand; Pooya Hoseinpour

doi:10.1016/j.tre.2025.103995

Profit maximization in congested hub location problems: Demand models and service level constraints

Department of Economics and Business Economics

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Abstract

This study investigates a congested hub location problem with the aim of optimizing a service provider’s profit by determining hub locations, capacities, and prices for serving commodities. The study incorporates a price-dependent demand function with a general functional form and models hub operations as M/G/1 queueing systems to address congestion effects. The problem is initially formulated as a mixed-integer nonlinear program, which is subsequently transformed into a mixed-integer second-order cone program, demonstrating solvability with standard off-the-shelf solvers. Through numerical analysis, the study evaluates the influence of different demand functional forms and service time constraints on the optimal network configuration and the service provider’s profitability.

Original language	English
Article number	103995
Journal	Transportation Research Part E: Logistics and Transportation Review
Volume	195
ISSN	1366-5545
DOIs	https://doi.org/10.1016/j.tre.2025.103995
Publication status	Published - Mar 2025

Keywords

Hub location problem
Congestion
Pricing
Queuing
Mixed integer second-order cone programming

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title = "Profit maximization in congested hub location problems: Demand models and service level constraints",

abstract = "This study investigates a congested hub location problem with the aim of optimizing a service provider{\textquoteright}s profit by determining hub locations, capacities, and prices for serving commodities. The study incorporates a price-dependent demand function with a general functional form and models hub operations as M/G/1 queueing systems to address congestion effects. The problem is initially formulated as a mixed-integer nonlinear program, which is subsequently transformed into a mixed-integer second-order cone program, demonstrating solvability with standard off-the-shelf solvers. Through numerical analysis, the study evaluates the influence of different demand functional forms and service time constraints on the optimal network configuration and the service provider{\textquoteright}s profitability.",

keywords = "Hub location problem, Congestion, Pricing, Queuing, Mixed integer second-order cone programming",

author = "Marand, {Ata Jalili} and Pooya Hoseinpour",

year = "2025",

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doi = "10.1016/j.tre.2025.103995",

language = "English",

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Profit maximization in congested hub location problems: Demand models and service level constraints. / Marand, Ata Jalili; Hoseinpour, Pooya.
In: Transportation Research Part E: Logistics and Transportation Review, Vol. 195, 103995, 03.2025.

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaper › Journal article › Research › peer-review

TY - JOUR

T1 - Profit maximization in congested hub location problems: Demand models and service level constraints

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AU - Hoseinpour, Pooya

PY - 2025/3

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N2 - This study investigates a congested hub location problem with the aim of optimizing a service provider’s profit by determining hub locations, capacities, and prices for serving commodities. The study incorporates a price-dependent demand function with a general functional form and models hub operations as M/G/1 queueing systems to address congestion effects. The problem is initially formulated as a mixed-integer nonlinear program, which is subsequently transformed into a mixed-integer second-order cone program, demonstrating solvability with standard off-the-shelf solvers. Through numerical analysis, the study evaluates the influence of different demand functional forms and service time constraints on the optimal network configuration and the service provider’s profitability.

AB - This study investigates a congested hub location problem with the aim of optimizing a service provider’s profit by determining hub locations, capacities, and prices for serving commodities. The study incorporates a price-dependent demand function with a general functional form and models hub operations as M/G/1 queueing systems to address congestion effects. The problem is initially formulated as a mixed-integer nonlinear program, which is subsequently transformed into a mixed-integer second-order cone program, demonstrating solvability with standard off-the-shelf solvers. Through numerical analysis, the study evaluates the influence of different demand functional forms and service time constraints on the optimal network configuration and the service provider’s profitability.

KW - Hub location problem

KW - Congestion

KW - Pricing

KW - Queuing

KW - Mixed integer second-order cone programming

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DO - 10.1016/j.tre.2025.103995

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JO - Transportation Research Part E: Logistics and Transportation Review

JF - Transportation Research Part E: Logistics and Transportation Review

M1 - 103995

ER -

Profit maximization in congested hub location problems: Demand models and service level constraints

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Keywords

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