Hub-and-Spoke Network Optimization with Flow Delay Cost: The Case of Goods Delivery on Urban Logistics Networks in Eastern China

Abstract

With respect to a traditional point-to-point (P-P) network, a hub-and-spoke (H-S) network not only uses a smaller number of links/paths but also utilizes the scale economy advantage on consolidated flows on hub–hub links and at hubs. However, the inevitable delays through hubs have always been a critical concern. Therefore, this paper develops an H-S model considering flow delay costs and applies the model to a logistics case in Eastern China. The integer quadratic term in the model’s objective function is linearized using the algebraic method. Our model is applied to develop an H-S network for its 13-node express package delivery operation, using the particle swarm optimization (PSO) algorithm. The results show using the H-S can save more than 14.1% of the total cost annually. The model also provides an applied case to the H-S configuration, especially for urban express delivery logistics in China.

Keywords

• flow delay cost
• hub-and-spoke network
• hub location and allocation
• optimization