A two-level network design problem with decentralized and centralized intermediate facilities

Abstract

Within the framework of the Two-Level Network Design Problems (TLND), we propose a hybrid network design problem that consists of both decentralized and centralized intermediate facilities for resource distribution systems. Singlecommodity ow based and multi-commodity ow based Mixed Integer Linear Programs (MILP) are developed for the problem. In addition, a heuristic algorithm that designs the lower-level and the upper-level networks sequentially is proposed as a solution method. We perform computational experiments with real and random spatial distributions to demonstrate the performance of the heuristic method. Wide ranges of cost parameter combinations are used and it is observed that for some parameter combinations hybrid networks may be the least cost design compared to centralized or decentralized networks.