Hub network design problem in the presence of disruptions

The main issue in p-hub median problem is locating hub facilities and allocating spokes to those hubs in order to minimize the total transportation cost. However hub facilities may fail occasionally due to some disruptions which could lead to excessive costs. One of the most effective ways to hedge against disruptions especially intentional disruptions is designing more reliable hub networks. In this paper, we formulate the multiple allocation p-hub median problem under intentional disruptions by a bi-level model with two objective functions at the upper level and a single objective at the lower level. In this model, the leader aims at identifying the location of hubs so that minimize normal and worst-case transportation costs. Worst-case scenario is modeled in the lower level where the follower’s objective is to identify the hubs that if lost, it would mostly increase the transportation cost. We develop two multi-objective metaheuristics based on simulated annealing and tabu search to solve the problem. Computational results indicate the viability and effectiveness of the proposed algorithms for exploring the non-dominated solutions.