An adaptive structure of a hub-and-spoke system with direct and depot shipments in the case of volatile demand over time

The classical logistic structure for a group age delivery system in a defined geographic region is often created by a hub-and-spoke system consisting of depots, service areas of the depots, routes for each depot from and to the customers in the service area, and a line haul design. The hub-and-spoke structure is fixed as part of strategic planning. Due to the long planning horizon of strategic planning it is often difficult to predict demand over time. Operating a certain hub-and-spoke system in case of highly variable demand during the life cycle can result in inefficiency of the transportation system. In this paper an adaptive planning system is developed that can rearrange the service areas and the depots as well as the trans-loading points between line haul and local tours of the service areas and determine new vehicle routes. Our hub-and-spoke system also allows direct service from the hub to a single customer. The re-optimization of the hub-and-spoke system is based on a solution of a multi-depot variable service areas vehicle routing problem (MD-VSA-VRP). The problem is NP-hard. In this paper we present a mixed integer linear program and a metaheuristic solution concept. Further, we show via case studies the applicability of the new planning model.