Facility and hub location model based on gravity rule

•A realistic formulation on “Domestic Facility and Hub Location” in transportation network was proposed based on gravity rule.•Joint decision model subjected to number and location of domestic facilities and hubs were investigated.•An algorithm based on Gamma heuristic was developed to solve the problem.

This paper presents a model for “Domestic Facility and Hub Location” in transportation network. Number of hubs and facilities are unknown and the objective is to minimize the transportation cost, lost demand penalty and facility set up costs. Also the distribution of demand among domestic facilities and hubs adheres to gravity rule. To solve the problem, sequential and integrated approaches were undertaken. In the sequential approach, domestic facilities were allocated and hubs were selected afterwards. However the integrated approach deals with both concurrently, with a more sophisticated steps reaching to the solution. This is mainly because the demand itself is highly dependent to where the facilities are going to be located. Heuristic solutions were employed and was tested in a set of Turkish network and validated by CPLEX software in small cases.