Solving the hub location problem with modular link capacities

This paper deals with a capacitated hub location problem arising in the design of telecommunications networks. The problem is different from the classical hub location problem in two ways: the cost of using an edge is not linear but stepwise and the capacity of a hub restricts the amount of traffic transiting through the hub rather than the incoming traffic. In this paper both an exact and a heuristic method are presented. They are compared and combined in a heuristic concentration approach to investigate whether it is possible to improve the results within limited computational times.