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

Ata Jalili Marand, Pooya Hoseinpour

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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 languageEnglish
Article number103995
JournalTransportation Research Part E: Logistics and Transportation Review
Volume195
ISSN1366-5545
DOIs
Publication statusPublished - Mar 2025

Keywords

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

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