An exact solution procedure for a cluster hub location problem

This paper proposes a new (MIP) model formulation and a new solution procedure for the hub network design problem under a non-restrictive policy introduced by Sung and Jin [Sung, C.S., Jin, H.W., 2001. Dual-based approach for a hub network design problem under non-restrictive policy. European Journal of Operational Research 132 (1), 88–105]. The model formulation contains significantly fewer variables so that optimal solutions for the LP-relaxation of the model can be determined for large instances using standard procedures for LP-models. Furthermore, the LP-relaxation provides very tight lower bounds. Computational results are given, which demonstrate that the new model formulation allows for solving much larger instances. It turned out that the new (exact) solution procedure, which utilises the new model formulation, is faster than the heuristic proposed by Sung and Jin (2001). It is also shown that the problem is np-hard.