Computers & Operations Research 32 (2005) 1615 1632

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Hub-and-spoke network design with congestion

Samir Elhedhli , Frank Xiaolong Hu
Department of Management Sciences, University of Waterloo, 200 Univ. Ave. West,
Waterloo Ont., Canada OT N2L3

Abstract

We consider a hub-and-spoke network design problem with congestion. The model we propose extends
current models by taking congestion e/ects into account. This is achieved through a non-linear cost term
in the objective function. We 2rst linearize the model, and then provide a Lagrangean heuristic that 2nds
high-quality solutions within reasonable computational time. The results of the model provide new and realistic
insights into the hub-and-spoke network design problem.
? 2003 Published by Elsevier Ltd.

Keywords: Hub-and-spoke network design; Congestion; Non-linear integer programming; Lagrangean relaxation

1. Introduction

Hub-and-spoke topologies are an important class of networks that take full advantage of economies
of scale on interhub links. Such networks have applications in airline passenger travel [1], cargo
delivery [2], and message delivery in telecommunication networks [3], to name a few. The basic
hub-and-spoke network design problem can be described as follows: given a network of nodes where
each pair has a given <ow, determine which nodes are set as hubs so that every <ow is 2rst routed
through one or two hubs before being disseminated to its destination. The routing through hubs takes
advantage of economies of scale on interhub links. Although this may increase travel distance or
time, it decreases travel cost.
The hub-and-spoke problem was 2rst studied by OKelly [4,5] who developed a quadratic pro-
gramming model and proposed two enumeration heuristics. The 2eld has then experienced a high
level of activity focusing both on the design of better solution methods and on the expansion of the
current models to incorporate a variety of realistic situations.

Corresponding author. Tel.: +1-519-8884567; fax: +1-519-746-7252.
E-mail addresses: elhedhli@engmail.uwaterloo.ca (S. Elhedhli), x3hu@engmail.uwaterloo.ca (F.X. Hu).

0305-0548/$ - see front matter ? 2003 Published by Elsevier Ltd.

doi:10.1016/j.cor.2003.11.016
1616 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632

On the solution side, most of the early work focused on the design of eGcient solution heuristics
due to the diGculty and large-size of the problem, see for example Campbell [6], Klincewicz [7,8],
Skorin-Kapov and Skorin-Kapov [9], Aykin [10], Ernst and Krishnamoorthy [11], Smith et al. [12],
Pirkul and Schilling [13] and Ebery [14]. To assess the quality of such heuristics, it was necessary
to 2nd tight lower bounds. OKelly et al. [15] have proposed a variety of good lower bounds.
Later research has focused on the extension of the basic hub-and-spoke problem to capture more
realistic settings. Issues such as multiple versus single assignment of nodes to hubs, capacitated
versus non-capacitated interhub <ows, the possibility of allowing direct shipments between non-hub
nodes, and the proper formulation of the interhub discount cost factor to be a function of <ow, were
the main extensions. Campbell [16], Klincewicz [17], Ernst and Krishnamoorthy [18] looked and
the multi-assignment case, while Aykin [19], Ernst and Krishnamoorthy [20] considered capacities
on <ows. One of the recent models that considers capacities as well as multiple assignments is
due to Ebery et al. [21] who propose a shortest path-based heuristic that is embedded with in a
branch-and-bound algorithm. Kuby and Gray [22] and Aykin [23] developed models that allow the
direct connection between two non-hub models. OKelly and Bryan [24], Klincewicz [25] looked at
models where the interhub discount cost is a function of the interhub <ow, re<ecting cost economies
of scale.
Being aware that the hub location problem shares some of its characteristics with the classical
facility location problem, versions such as the p-hub median, the p-hub centre and hub-covering
were proposed by Campbell [16]. In this direction, Kara and Tansel [26] considered the objective of
minimizing the latest-arrival time by considering transient times at hubs and Kara and Tansel [27]
studied hub covering problems. The consideration of multiple objectives/decision makers/criteria can
be looked at in the context of the work by Hamacher, Labbe and Nickel [28,29]. For a recent and
up-to-date review and classi2cation of hub location problems, see Campbell et al. [30].
This paper looks at another extension of the hub-and-spoke network design model by considering
congestion at hubs. Taking advantage of economies of scale at interhub links, current hub-and-spoke
network design models tend to concentrate increasing amounts of <ow at hubs, making it necessary to
take congestion e/ects into account. The relationship between hub-and-spoke networks and congestion
was initially investigated by Grove and OKelly [31]. They simulated the daily operations of single
assignment hub-and-spoke network with 2xed hub locations and showed that schedule delays are
determined to a great extent by the amount of <ow at hubs. To the best of our knowledge, the only
paper that considers congestion within a hub-and-spoke model is that of Marianov and Serra [32].
They modelled the hub-and-spoke network as an M/D/c queuing network and imposed a probabilistic
constraint that bounds the probability of having more than a speci2ed number of entities (airplanes)
waiting in queue. They linearized the probabilistic constraint and solved the model using tabu search.
We model the congestion e/ect at a certain hub using a convex cost function that increases
exponentially as more <ows are routed through that hub. The justi2cation to use such a function is
discussed in de Palma and Marchal [33] for traGc models and in Gillen and Levinson [34] for airport
management. In particular, it is stated in [34] that a widely used approach to estimate delay costs
is that of the US-Federal Aviation Administration which assumes that the delay cost is a power-law
function of airport usage relative to its capacity. The same such function is used in this paper. The
congestion cost function is aimed at balancing <ow between hubs, avoiding the case where some
interhub links are over-utilized compared to others. This fact is recognized buy Ebery [21] who
imposes capacities on incoming <ows. Solution to such models may have the surprising result that
 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632 1617

<ow from a hub to itself is routed through another hub and has to be taken care of separately
[30]. This situation will never happen using the congestion function we use as routing a hubs <ow
to itself through another hub will lead to higher costs. This is one of the bene2ts of considering
the congestion cost explicitly in the objective. In addition modelling congestion through capacity
constraints does not re<ect the fact that the congestion cost has an exponential e/ect in nature: the
more congestion you have the more costs you incur. Hence, the use of a non-linear convex function.
It is worth noting that some of the models proposed in the literature although not explicitly
mentioning congestion do achieve the purpose of avoiding congestion [36] and/or excessive delays
at hubs [26]. In particular, the hub arc location problem [36] looks at the location of arcs with
discounted costs, and therefore the selection of arcs could very well be based on the balance of <ow
and the avoidance of congestion. The model presented in this paper is the 2rst to explicitly have
among its objectives the minimization of congestion.
The resulting hub-and-spoke network design model with congestion is a non-linear large-scale
mixed integer program. We 2rst propose a linearization of the problem using piecewise linear func-
tions, and then apply a Lagrangean approach where the lower bound is calculated using a subgradient
algorithm and feasible solutions are generated based on the solution of the subproblems. We were
able to solve problems of the CAB data set to within 1% of optimality in reasonable time. The
new solutions provide new insights into the realistic design of hub-and-spoke networks that take
advantage of economies of scale on interhub links and, at the same time, avoid congestion at hubs.
The paper is organized as follows: In the following section, the hub-and-spoke network design
problem is discussed in detail. In Section 3, a non-linear convex cost function is introduced and
analyzed to capture congestion. Then, in Section 4, the full model is presented and linearized. In
Section 5, a Lagrangean heuristic is developed to solve the model. Computational analysis and
conclusions are presented in Sections 6 and 7, respectively.

2. Problem description

In this paper, we consider the uncapacitated, single assignment p-hub location problem





[USApHLP] : min Fijkm Xijkm (1)
i ji k m

s:t: Zik = 1 i; (2)
k

Zik 6 Zkk i; k; (3)

Zkk = p; (4)
k


Xijkm = Zik k; i; j i; (5)
m
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Xijkm = Zjm m; i; j i; (6)
k

Xijkm ; Zik {0; 1} i; j i; k; m; (7)

where k and m are indices for potential hub locations, i and j are indices for origin and destina-
tion nodes, p is the number of hubs to be located, and Fijkm is the total cost of routing <ow (i; j)
through path (i; k; m; j). This cost is given by Wij (Cik + Ckm + Cmj ) where Cij is the unit travel
cost from node i to node j, Wij is the <ow from i to j and  is the unit discount between hubs.
The decision variables Zik , Zkk and Xijkm are binary decision variables that take value 1 if node i
is allocated to hub k, node k is selected as a hub, and <ow (i; j) is routed from i to k to m to j,
respectively.
Constraints (2) ensure that every node is allocated to exactly one hub. Constraints (3) guarantee
that a node will not be assigned to a hub unless that hub is opened. Constraint (4) requires p hubs
be opened. Constraints (5) and (6) ensure that for any <ow (i; j) that uses interhub link (k; m), nodes
i and j must be assigned to hubs k and m, respectively. The objective function (1) minimizes the
total cost of routing <ows through one or two hubs. This cost function does not account for possible
congestion that results from the consolidation of large amounts of <ow at selected hubs. This will
typically happen as the reduced interhub costs will induce the model to concentrate large amounts
of <ow at certain hubs, causing them to be over-utilized.

3. The congestion cost function

Congestion occurs at major airports (hubs), where numerous <ights converge at peak hours. When
more <ows are directed into a hub, congestion increases accordingly and causes a dramatic increase
in costs [31]. This relationship can be depicted by a power-law cost function of the form

f(u) = aub ;

where u is the <ow at a hub; a and b are positive constants withb 1. 
Using the notation in USApHLP, the <ow through hub k is i ji m Wij Xijkm . Therefore,
the congestion cost at hub k is
 b  b






a Wij Xijkm = a Wij Zik ;
i ji m i ji

where the last equality is obtained using constraint (5)

Wij Xijkm = Wij Xijkm = Wij Zik k:
i ji m i ji m i ji

As mentioned earlier, it is reasonable to assume that the congestion cost follows the above function
(de Palma and Marchal [33], Gillen and Levinson [34], FAA [35]). Fig. 1(1) and (2) plot the
congestion cost functions for di/erent values of the parameters a and b.
 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632 1619

Fig. 1. The congestion cost functions for di/erent values of a and b.

4. A hub-and-spoke network model with congestion

Incorporating the congestion cost function in the objective of USApHLP, we obtain the uncapac-
itated single assignment hub location problem with congestion
 b









[USApHLPC] : min Fijkm Xijkm + a Wij Xijkm
i ji k m k i ji m

s:t: (2)(7):

USApHLPC is a non-linear mixed integer problem that might be diGcult to solve directly.
In what follows we propose a linearization and in the next section we develop a Lagrangean
heuristic.
Being convex, the congestion cost function can be approximated by the maximum of a set of
piece-wise linear and tangent hyperplanes. The approximation allows us to formulate the problem as
a linear mixed integer program, but with an in2nite number of constraints. For ease of exposition,
let uk denote the <ow at hub k. At a given <ow ukh , the tangent to f(uk ) is given by

f(ukh ) + f
(ukh )(uk ukh ) = a(1 b)(ukh )b + ab(ukh )b1 uk :

As the upper envelope of the tangent lines follows the shape of the function, the congestion cost
function f(uk ) can be linearized as

f(uk ) = max{a(1 b)(ukh )b + ab(ukh )b1 uk }

h Hk

where ukh , h Hk , is an in2nite set of points. The congestion function and its approximation are
depicted in Fig. 2.
1620 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632

f(uk )

uk

Fig. 2. The congestion cost function and its approximation.

Replacing f(uk ) by its value, the hub-and-spoke network model with congestion can be written
as
 b









min Fijkm Xijkm + max a(1 b) Wij Zikh
h H
i ji k m k i ji
 b1





+ ab Wij Zikh Wij Zik ;

i ji i ji

s:t: (2)(7)
which is equivalent to






min Fijkm Xijkm + a wk
i ji k m k

s:t:
 b1    b







wk b Wij Zikh Wij Zik (1 b) Wij Zikh h Hk
i ji i ji i ji

(2)(7):
The latter is a linear mixed integer program that has an in2nite number of constraints. In the
following section we propose a Lagrangean heuristic to solve it.

5. A Lagrangean heuristic

Pirkul and Schilling [17] proposed an eGcient Lagrangean heuristic to solve the linear-cost model
(USApHLP). In this paper, we relax the same set of constraints that they relax. Speci2cally, we
 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632 1621

relax constraints (2), (5) and (6) with Lagrangean multipliers ; ; , respectively, and obtain the
following subproblem:









ZR (; ; ) = min CP ik Zik + FP ijkm Xijkm a wk i
i k i ji k m k i

s:t:
 b1  





wk b Wij Zikh Wij Zik (8)
i ji i ji
 b



(1 b) Wij Zikh h Hk
i ji

(3); (4); (7);

where



CP ik = i kij kji and FP ijkm = Fijkm + kij + mij :
ji ji

Problem (8) separates in two subproblems

[SUB1] : min CP ik Zik + a wk
i k k

s:t:
 b1  





wk b Wij Zikh Wij Zik
i ji i ji
 b



(1 b) Wij Zikh h Hk
i ji

Zik 6 Zkk i; k; (3)

Zkk = p; (4)
k

Zik {0; 1} i; k
and






[SUB2] : min FP ijkm Xijkm i
i ji k m i

s:t:


(9)
Xijkm = 1 i; j i;
k m

Xijkm {0; 1} i; j i; k; m;
1622 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632

Constraints (9) are included as it was found in [17] that their addition signi2cantly improved the
Lagrangean lower bound. SUB2 is a simple Knapsack problem that is easily solvable. Its solution
amounts to 2nding the minimum FP ijkm and setting its corresponding Xijkm to 1. In the following
section, we provide a solution procedure for SUB1.

5.1. Solution to subproblem SUB1

In the absence of constraints (4), SUB1 separates into a set of smaller problems one for each
potential hub k
[SUB1-k]:


min CP ik Zik + awk
i

s:t:
 b1  





wk b Wij Zikh Wij Zik
i ji i ji (10)
 b



(1 b) Wij Zikh h Hk ;
i ji

Zik 6 Zkk i; k;
Zik {0; 1} i; k:

Note that, by working backwards, [SUB1-k] is equivalent to

 b




min CP ik Zik + a Wij ZP ik
i i ji

s:t:
Zik 6 Zkk i; k;
Zik {0; 1} i; k:

As SUB1-k has an in2nite number of constraints, its solution is done iteratively using a cutting
plane approach where an initial set of constraints is started with and the rest is added as needed.
This is summarized in Fig. 3.
Note that the procedure sets Zkk to 1 and 2nds the corresponding optimal solution. If the obtained
solution has a negative objective, then it is the optimal solution to [SUB1-k], otherwise the optimal
to [SUB1-k] is zero. Having solved problems [SUB1-k] for all k, the solution to [SUB1] amounts
to picking the solutions corresponding to the problems with the p smallest objective values. This is
summarized in Fig. 4.
 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632 1623

Fig. 3. The solution of [SUB1-k].

Fig. 4. The solution procedure for SUB1.

5.2. Calculating the Lagrangean bound

For any choice of the Lagrange multipliers ; ; , a Lagrangean lower bound is given by ZR (; ; ).
The best such lower bound is the solution of the dual Lagrangean problem
ZR ( ;  ;  ) = max ZR (; ; ):
;;

To 2nd the optimal set of multipliers ( ;  ;  ), we use a subgradient algorithm as in [17]. Starting
with initial values, the multipliers are updated as in Fig. 5, where  is the stepsize multiplier,
ZP ik ; XP ijkm are the current solutions of the subproblems, ZL is the best Lagrangean multiplier found
so far and Zb is the objective of the best feasible solution found so far.

5.3. Generating feasible solutions

We use a Lagrangean heuristic that builds on top of the solution to SUB1. A feasible solution to
USApHLPC is generated at each iteration of the subgradient algorithm. The procedure follows that
in Pirkul and Schilling [17] and is reproduced in Fig. 6.
1624 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632

Fig. 5. Adjustment of the multipliers in the subgradient algorithm.

Fig. 6. The Lagrangean heuristic to generate feasible solutions.

5.4. The overall lagrangean algorithm

Putting together the di/erent parts discussed so far, the overall Lagrangean algorithm to solve the
hub-and-spoke network design problem with congestion USApHLPC is given in Fig. 7.
 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632 1625

Fig. 7. Overall Lagrangean algorithm to solve USApHLPC.

Fig. 8. US cities in the CAB data set.

6. Computational analysis

To test the proposed model and algorithm, we use the CAB data set of the US Civil Aeronautics
Board (CAB). This is a standard data set that was used in most previous studies (see for example
OKelly and Bryan [7]). The <ows are scaled to sum to one over the entire network. The cities
used in the data set are shown on the US map in Fig. 8 and displayed in Table 1.
The algorithm is coded in Matlab 6.1. Because Matlab is not quite eGcient in running loops,
all the loops are coded in C and are called from Matlab. We use Cplex 8.1 in the solution of
subproblem SUB1. The runs are made on Sun Ultra-10/440 workstation. The stopping criterion is
set to a gap of 1%. We use di/erent congestion cost function forms by changing the parameter a
and b. Three values are used for a (0.1,1,10) and four values for b (1.0,1.1,1.3,1.5).
Computational results for the models with 10, 15, 20 and 25 nodes are summarized in Tables 25
respectively. The 2rst two columns display the number of nodes and the required number of hubs
in the model. The third and fourth columns display a and b, the parameters of the congestion cost
function. The 2fth and sixth columns show the network costs and computational time, respectively.
1626 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632

Table 1
Cities in the CAB data set and their assigned numbers

1 Atlanta 6 Cleveland 11 Kansas City 16 New Orleans 21 St. Louis

2 Baltimore 7 Dallas-Fort Worth 12 Los Angeles 17 New York 22 San Francisco
3 Boston 8 Denver 13 Memphis 18 Philadelphia 23 Seattle
4 Chicago 9 Detroit 14 Miami 19 Phoenix 24 Tampa
5 Cincinnati 10 Houston 15 Minneapolis 20 Pittsburgh 25 Washington DC

Table 2
Computational results for 10-node models

No. of No. of a b Cost Computational Gap (%) Optimal

nodes hubs time (min) hubs

10 3 0.1 1 492.03 0.15 0.85 4,6,7

10 3 1 1 492.93 0.15 0.99 4,6,7
10 3 10 1 501.93 0.16 0.90 4,6,7
10 3 0.1 1.1 492.27 0.15 0.72 4,6, 7
10 3 1 1.1 495.31 0.17 0.82 4,6,7
10 3 10 1.1 525.68 0.18 0.98 4,6,7
10 3 0.1 1.3 495.80 0.21 0.93 4,6,7
10 3 1 1.3 530.59 0.24 0.89 4,6,7
10 3 10 1.3 878.47 0.38 0.94 4,6,7
10 3 0.1 1.5 536.51 0.24 0.97 4,6,7
10 3 1 1.5 933.65 0.31 0.79 4,6,7
10 3 10 1.5 4626.64 0.93 0.90 4,6,7
10 4 0.1 1 395.23 0.14 0.86 3,4,6,7
10 4 1 1 396.13 0.14 0.97 3,4,6,7
10 4 10 1 405.13 0.14 0.89 3,4,6,7
10 4 0.1 1.1 395.46 0.15 0.82 3,4,6,7
10 4 1 1.1 398.39 0.16 0.83 3,4,6,7
10 4 10 1.1 427.75 0.17 0.66 3,4,6,7
10 4 0.1 1.3 398.62 0.17 0.94 3,4,6,7
10 4 1 1.3 429.98 0.20 0.79 3,4,6,7
10 4 10 1.3 743.66 0.27 0.85 3,4,6,7
10 4 0.1 1.5 432.56 0.20 0.98 3,4,6,7
10 4 1 1.5 769.44 0.27 0.92 3,4,6,7
10 4 10 1.5 4053.63 0.80 0.94 3,4,7,9

Minimum 0.14 0.66

Maximum 0.93 0.99
Average 0.25 0.88

The seventh column provides the gap between the best heuristic solution Zb and the Lagrangean
lower bound ZL computed as
Gap = 100(Zb ZL)=ZL:
The last column displays the optimal set of hubs. For all these tests, we set  to 0.2.
 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632 1627

Table 3
Computational results for 15-node models

No. of No. of a b Cost Computational Gap (%) Optimal

nodes hubs time (min) hubs

15 3 0.1 1 800.37 0.67 1.00 4,7,12

15 3 1 1 800.97 0.64 0.97 4,7,12
15 3 10 1 809.97 0.65 1.00 4,7,12
15 3 0.1 1.1 802.13 0.78 0.99 4,7,12
15 3 1 1.1 803.79 0.72 0.98 4,7,12
15 3 10 1.1 838.15 0.88 0.94 4,7,12
15 3 0.1 1.3 805.61 0.94 1.00 4,7,12
15 3 1 1.3 856.39 1.12 0.97 4,7,12
15 3 10 1.3 1335.28 1.04 0.99 4,12,13
15 3 0.1 1.5 879.88 1.04 0.97 4,12,13
15 3 1 1.5 1540.50 1.48 0.82 1,4,12
15 3 10 1.5 7224.38 3.46 0.81 4,6,7
15 4 0.1 1 639.88 0.34 0.79 4,7,12,14
15 4 1 1 640.78 0.35 0.92 4,7,12,14
15 4 10 1 649.78 0.31 0.89 4,7,12,14
15 4 0.1 1.1 640.16 0.38 0.92 4,7,12,14
15 4 1 1.1 643.58 0.36 0.98 4,7,12,14
15 4 10 1.1 677.86 0.45 0.98 4,7,12,14
15 4 0.1 1.3 645.39 0.54 0.83 4,7,12,14
15 4 1 1.3 695.88 0.65 0.76 4,7,12,14
15 4 10 1.3 1151.00 1.56 0.93 1,4,7,12
15 4 0.1 1.5 722.70 0.93 0.97 4,7,12,14
15 4 1 1.5 1286.26 0.69 0.96 4,6,12,13
15 4 10 1.5 6336.53 3.49 0.96 1,4,6,7

Minimum 0.31 0.76

Maximum 3.49 1.00
Average 0.98 0.93

Keeping all other parameters the same, models with four hubs always achieve lower costs than
their counterpart with three hubs. This is because more hubs will provide more alternative routing
strategies, and cause less congestion.
From Tables 25, we can see that the computational times are reasonable for the sizes of the
problems and the achieved gap of 1%. As the number of nodes increases or a and b become
larger, the computational times increase. The average computational time is 0.25, 0.98, 3.89 and
4:47 min with gaps of 0.88%, 0.93%, 0.91% and 0.92% for networks with 10, 15, 20 and 25 nodes,
respectively.
The results show that the locations of the optimal hubs change according to variations in a and
b. As congestion is taken more into account (higher values of a and b), the set of optimal hubs
changes. There are certain hubs, however, that are always chosen. For example hub 4 (Chicago) is
always in the optimal set of hubs.
1628 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632

Table 4
Computational results for 20-node models

No. of No. of a b Cost Computational Gap (%) Optimal

nodes hubs time (min) hubs

20 3 0.1 1 724.64 1.39 0.95 4,12,17

20 3 1 1 725.54 1.85 0.99 4,12,17
20 3 10 1 734.54 1.51 0.99 4,12,17
20 3 0.1 1.1 724.95 1.81 0.99 4,12,17
20 3 1 1.1 728.61 1.92 0.95 4,12,17
20 3 10 1.1 765.24 1.96 0.98 4,12,17
20 3 0.1 1.3 731.34 1.68 0.96 4,12,17
20 3 1 1.3 792.59 2.24 0.99 4,12,17
20 3 10 1.3 1395.27 3.23 0.95 4,12,17
20 3 0.1 1.5 839.49 2.18 0.98 4,12,17
20 3 1 1.5 1786.71 3.83 0.99 4,7,17
20 3 10 1.5 10653.42 19.15 1.00 4,7,17
20 4 0.1 1 577.72 1.12 0.92 4,12,16,17
20 4 1 1 578.62 1.13 0.91 4,12,16,17
20 4 10 1 587.62 1.16 0.68 4,12,16,17
20 4 0.1 1.1 578.01 1.42 0.99 4,12,16,17
20 4 1 1.1 581.53 1.62 0.86 4,12,16,17
20 4 10 1.1 616.75 1.62 0.43 4,12,16,17
20 4 0.1 1.3 583.65 1.42 0.76 4,12,16,17
20 4 1 1.3 637.91 1.61 0.74 4,12,16,17
20 4 10 1.3 1173.41 1.87 0.99 4,12,16,17
20 4 0.1 1.5 671.24 1.80 0.97 4,12,16,17
20 4 1 1.5 1477.35 2.41 0.89 4,12,16,17
20 4 10 1.5 9239.23 9.40 0.94 4,7,17,20

Minimum 1.12 0.43

Maximum 19.15 1.00
Average 2.89 0.91

As parameter b determines the level of non-linearity of the congestion cost function, we investigate
the relationship between b and the optimal set of hubs. Table 6 displays the optimal hubs for
a network of 20 nodes and 3 hubs. For b = 1, 1.1 or 1.3, the optimal hubs are 4 (Chicago),
12 (Los Angeles), and 17 (New York). For b = 1:5, hub 7 (Dallas-Fort Worth) replaces hub 12
(Los Angeles). This suggests that Los Angeles was overloaded in models that do not give much
importance to congestion. When congestion was taken into account, the model replaced Los Angeles
by Dallas-Fort Worth.
It is common for hub-and-spoke models that ignore congestion to have solutions that concentrate
large amounts of <ow at few interhub links and keep the majority under-utilized [7]. In such models,
the decreasing rate of the cost function encourages more <ows to be consolidated at few hubs. In
this papers model, the congestion cost function is supposed to balance the dissemination of <ows.
To illustrate this, Table 7 displays interhub <ows for three congestion models with 10 nodes, 3 hubs,
a = 10, and b = 1:1, 1.3, and 1.5, respectively. For comparison, interhub <ows for the non-congestion
 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632 1629

Table 5
Computational results for 25-node models

No. of No. of a b Cost Computational Gap (%) Optimal

nodes hubs time (min) hubs

25 3 0.1 1 767.45 2.91 0.99 4,12,17

25 3 1 1 768.35 3.25 0.99 4,12,17
25 3 10 1 777.35 2.99 0.94 4,12,17
25 3 0.1 1.1 767.77 3.31 0.92 4,12,17
25 3 1 1.1 771.55 3.20 0.96 4,12,17
25 3 10 1.1 809.31 3.54 0.96 4,12,17
25 3 0.1 1.3 774.79 3.37 0.98 4,12,17
25 3 1 1.3 841.74 4.05 0.92 4,12,17
25 3 10 1.3 1501.36 5.71 0.89 4,12,17
25 3 0.1 1.5 899.34 4.34 0.99 4,12,17
25 3 1 1.5 2049.31 7.36 0.89 4,12,17
25 3 10 1.5 12881.84 11.15 0.97 4,8,18
25 4 0.1 1 629.73 2.73 0.95 4,12,17,24
25 4 1 1 630.63 2.86 0.96 4,12,17,24
25 4 10 1 639.63 2.67 0.76 4,12,17,24
25 4 0.1 1.1 630.04 3.09 0.97 4,12,17,24
25 4 1 1.1 633.70 2.77 1.00 4,12,17,24
25 4 10 1.1 670.29 3.12 0.88 4,12,17,24
25 4 0.1 1.3 636.40 3.33 0.89 4,12,17,24
25 4 1 1.3 697.33 3.36 0.82 4,12,17,24
25 4 10 1.3 1292.17 3.74 0.81 4,12,16,17
25 4 0.1 1.5 742.75 4.33 0.92 4,12,17,24
25 4 1 1.5 1705.49 5.19 0.91 1,4,12,17
25 4 10 1.5 11113.32 14.85 0.83 1,4,12,17

Minimum 2.67 0.76

Maximum 14.85 1.00
Average 4.47 0.92

Table 6
Optimal hubs for the network with 20 nodes and 3 hubs for di/erent values of b

No. of nodes No. of hubs a b Optimal hubs

20 3 1.0 1.0 4,12,17

20 3 1.0 1.1 4,12,17
20 3 1.0 1.3 4,12,17
20 3 1.0 1.5 4,7,17

model with the same number of nodes and hubs is shown in the last row of Table 7. The percentages
of <ow for each interhub link are listed in columns 2 4. To compare the <ow distribution, we
calculate the ratio of the maximum to the minimum interhub <ow (max/min ratio). Greater max/min
ratios indicate an unbalanced <ow distribution.
1630 S. Elhedhli, F.X. Hu / Computers & Operations Research 32 (2005) 1615 1632

Table 7
Flow distribution for a network with 20 nodes, 3 hubs, a = 10 for di/erent values of b

b Interhub <ow (%) max/min ratio

1.1 11.7% 19.8% 68.5% 5.9

1.3 15.1% 19.7% 65.2% 4.3
1.5 24.5% 35.6% 39.9% 1.6

Non-congestion 4.9% 8.4% 86.7% 17.7

It is clear that the max/min ratio decreases as b increases, which suggests that taking conges-
tion into account leads to a fairly balanced <ow distribution. The max/min ratio is 17.7 for the
non-congestion model with 86.7% of the <ow being assigned to a single interhub link. Clearly the
linear-cost model exploits economies of scale, but fails to account for the resulting congestion. The
hub-and-spoke network model with congestion achieves a more realistic balance of <ow, especially
for the case when b = 1:5. This also reveals that even though congestion and non-congestion models
might open the same set of hubs, the assignment of nodes to hubs is more likely to be di/erent.

7. Conclusion

This paper extends classical hub-and-spoke network design models by considering congestion
e/ects at selected hubs. This is achieved through a convex cost function that increases exponen-
tially as more <ows are assigned to hubs. The resulting nonlinear congestion model is diGcult to
solve directly, especially for large instances. Therefore, we linearize the model by approximating the
nonlinear cost function with a set of tangent hyperplanes. We use Lagrangean relaxation to provide
a lower bound and use the solution from one of the subproblems to 2nd a heuristic solution. The
heuristic 2nds high-quality solutions within reasonable computational time. The analysis illustrates
that the optimal set of hubs changes as congestion becomes more serious (larger values of a and b).
Comparison with the non-congestion model reveals that the congestion model achieves a balanced
distribution of <ows. For future research, it would be worthwhile to consider a hub-and-spoke net-
work with both economies of scale captured by a concave cost function and congestion modelled by
a convex cost function. Although the model is more realistic, its solution might be a real challenge.

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