A tabu search based solution approach to the competitive multiple allocation hub location problems

The hub location problems (HLP) constitute an important class of facility location problems that have attracted attention of the operations researchers in recent years. HLP is one of the strategic problems frequently encountered in designing logistics and transportation networks. This paper addresses the competitive multiple allocation HLP where the market is assumed to be a duopoly. It is assumed that an incumbent firm (the leader) is operating an existing hub network in a market and an entrant firm (the follower) tries to enter the market by configuring its own hub network trying to capture as much flow as possible from the leader. The customers choose one firm based on the service level (cost, time, distance, etc.) provided by these firms. We formulate the problem from the entrant firm’s point of view and propose an efficient tabu search (TS) based solution algorithm to solve it. Computational experiments show the capability of the proposed solution algorithm to obtain the optimal solutions in short computational times

Keywords:

Hub location , competitive models , mathematical formulation , tabu search