Interfacility Interaction in Models of Hub and Spoke Networks

Morton E. O’Kelly and Deborah Bryan

Journal of Regional Science, 2002, vol. 42, issue 1, 145-164

Abstract: Providers of transportation services may reduce their average unit costs by bundling flows and channeling them between hubs (also known as concentrators or routers). The resulting facility locations are interdependent because of the flows between them. This paper analyzes mathematical models of hub systems in an effort to enhance understanding of the optimal location of interactive facilities. The paper examines the behavior of solutions to several alternative models that require the location of a hub at either of two similar locations. A model employing a concave cost function favors the assembly of flows, penalizes fractional facility locations, and produces local minima that have integer facilities.

Date: 2002
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