A reconfiguration optimisation model for hub-and-spoke network mergers

Abstract

Reconfiguring the merged hub-and-spoke networks (HSNs) improves the efficiency of logistics operations by optimally integrating logistics service resources. Typically, the reconfiguration of HSN focuses on minimising the operating cost, while ignoring service level and environmental considerations. This paper develops a novel optimisation strategy for HSN mergers problem, in which vehicle speeds are formulated as decision variables of a nonlinear multi-objective mixed-integer programming model that considers the vehicle emissions cost, on-time delivery cost and operating cost. To overcome the nonlinear complexity, the formulated model is transformed into a second-order mixed-integer cone programming model. Furthermore, the trade-offs between the vehicle emissions cost, on-time delivery cost and operating cost are analysed. The experimental results demonstrate that the new HSN optimisation strategy with vehicle speeds as the decision variables can significantly reduce the vehicle emissions cost, on-time delivery cost, and operating cost. [Received: 16 December 2015; Revised: 14 April 2016; Revised: 26 July 2016; Accepted: 29 July 2016]