Hub-and-spoke network design with congestion

We consider a hub-and-spoke network design problem with congestion. The model we propose extends current models by taking congestion effects into account. This is achieved through a non-linear cost term in the objective function. We first linearize the model, and then provide a Lagrangean heuristic that finds high-quality solutions within reasonable computational time. The results of the model provide new and realistic insights into the hub-and-spoke network design problem. (C) 2003 Published by Elsevier Ltd.