Abstract: Hierarchical hub location problems locate hub facilities on the first and second of three levels under the best economic conditions. The present study introduced a novel hierarchical hub set covering problem with capacity constraints. This study showed the significance of fixed charge costs for locating facilities, assigning hub links and designing a productivity network. Set covering was imposed to use the minimum number of variables and coverage constraints. The proposed model employs mixed integer programming to locate facilities and establish links between nodes according to the travel time between an origin-destination pair within a given time bound. The demand nodes are fairly covered at each service level and no demand node remains unanswered. The formulation was linearized by replacing the non-linear constraints with less intuitive linear structures. The resulting linear model was solved using GAMS and tested on the Australian Post dataset and the Iranian Airport dataset.
