Modeling congestion and service time in hub location problems

In this paper, we present a modeling framework for hub location problems with a service time limit considering congestion at hubs. Service time is modeled taking the traveling time on the hub network as well as the handling time and the delay caused by congestion at hubs into account. We develop mixed-integer linear programming formulations for the single and multiple allocation versions of this problem. We further extend the multiple allocation model with a possibility of direct shipments. We test our models on the well-known AP data set and analyze the effects of congestion and service time on costs and hub network design. We introduce a measure for the value of modeling congestion and show that not considering the effects of congestion may result in increased costs as well as in building infeasible hub networks.