Network planning of urban underground logistics system with hub-and-spoke layout: Two phase cluster-based approach

Purpose: Underground logistics system (ULS) is recognized as sustainable alleviator to road-dominated urban logistics infrastructure with various social and environmental benefits. The purpose of this study is to propose effective modeling and optimization method for planning a hub-and-spoke ULS network in urban region. Design/methodology/approach: Underground freight tunnels and the last-mile ground delivery were organized as a hierarchical network. A mixed-integer programming model (MIP) with minimum system cost was developed. Then a two-phase optimization schema combining Genetic-based fuzzy C-means algorithm (GA-FCM), Depth-first-search FCM (DFS-FCM) algorithm and Dijkstra algorithm (DA), etc. was designed to optimize the location-allocation of ULS facilities and customer clusters. Finally, a real-world simulation was conducted for validation. Findings: The multistage strategy and hybrid algorithms could efficiently yield hub-and-spoke network configurations at the lowest objective cost. GA-FCM performed better than K-means in customer-node clustering. The combination of DFS-FCM and DA achieved superior network configuration than that of combining K-means and minimum spanning tree technique. The results also provided some management insights: (1) greater scale economies effect in underground freight movement could reduce system budget, (2) changes in transportation cost would not have obvious impact on ULS network layout and (3) over 90% of transportation process in ULS network took place underground, giving remarkable alleviation to road freight traffic. Research limitations/implications: Demand pairs among customers were not considered due to lacking data. Heterogeneity of facilities capacity parameters was omitted. Originality/value: This study has used an innovative hybrid optimization technique to address the two-phase network planning of urban ULS. The novel design and solution approaches offer insights for urban ULS development and management.