IEOR - Designing a More Efficient World

Reliable Hub Location Model for Air Transportation Networks Under Random Disruptions

Publication Date: April 1, 2020

H Shen, Y Liang, ZJM Shen (2019). Reliable Hub Location Model for Air Transportation Networks under Random Disruptions. To appear in Manufacturing & Service Operations Management. https://doi.org/10.1287/msom.2019.0845.


Abstract:

Problem definition: In this paper, we study a reliable hub location model, the objective of which is to minimize the associated costs plus the penalty for unserved demands. The model assigns to each origin–destination pair a primary path and a backup path to hedge against the risk of random disruptions. Aside from the fixed costs of locating hubs, the fixed costs incurred by hub-connecting arcs that exhibit economies of scale in transportation are considered. Academic/practical relevance: The widely adopted hub-and-spoke architecture in the network designs can trigger cascading effects during and in the aftermath of disruption events and lead to further losses. By incorporating a general specification of disruptions, our model helps firms improve network reliability while inheriting the benefits of routing via hubs. Therefore, this work extends the literature on hub location problems by considering reliability under disruptions.