Reliable capacitated hub location problem under hub failure possibility

This paper addresses the reliable capacitated single and multiple allocation hub location problem in which the hub facilities are subject to failure from time to time. In case of hub failures, customers originally assigned to the failed hubs have to be reassigned to other (operational) hubs. This problem may arise in many realistic situations in some industries such as transportation and telecommunication. The problem is formulated as a two-stage stochastic program for both single and multiple allocation cases. The deterministic equivalents of the two stage programs are then derived by defining a set of scenarios to reflect the uncertainties in the models. The proposed models are solved using a standard optimization software on a set of existing test problems and some managerial insights are presented based on the results obtained by the numerical experiments.