The hierarchical hub median problem with single assignment

We study the problem of designing a three level hub network where the top level consists of a complete network connecting the so-called central hubs and the second and third levels are unions of star networks connecting the remaining hubs to central hubs and the demand centers to hubs and central hubs, respectively. The problem is to decide on the locations of a predetermined number of hubs and central hubs and the connections in order to minimize the total routing cost in the resulting network. This problem includes the classical p-hub median problem as a special case. We also consider a version of this problem where service quality considerations are incorporated through delivery time restrictions. We propose mixed integer programming models for these two problems and report the outcomes of a computational study using the CAB data and the Turkey data.