Benders decomposition for the Hazmat Transport Network Design Problem

We propose a new method for solving the Hazmat Transport Network Design Problem. In this problem, the government wants to reduce the risk of hazardous accidents for the population by restricting the shipment of hazardous goods on roads. When taking that decision, the government has to anticipate the reaction of the carriers who want to minimize the transportation costs by solving a shortest path problem. We use a bilevel formulation that guarantees stable solutions and transform this model into a mixed-integer linear program by applying the Karush-Kuhn-Tucker conditions. This model is solved to optimality with a multi-cut Benders decomposition. Valid inequalities and an acceleration approach for the master problem further reduce both the iteration number and the run time. Moreover, a partial decomposition technique for bilevel problems is introduced. The numerical study shows the computational benefits of the method and run time savings of more than 50% for large instances compared to a cutting plane method from the literature. The method is especially efficient for large number of shipments. Finally, we show that the bilevel model reduces the risk by 35% on average compared to a two-step decision process that does not anticipate the carriers' reaction.