Network design: selection and design of links and facility location Zvi Drezner a, * , George O. Wesolowsky b a Department of Management Sciences, College of Business and Economics, California State University, Fullerton, CA 92834, USA b Faculty of Business, McMaster University, Hamilton, Ont., Canada L8S-4M4 Received 19 November 2001; received in revised form 22 April 2002; accepted 25 April 2002 Abstract In this paper we introduce new network design problems. A network of potential links is given. Each link can be either constructed or not at a given cost. Also, each constructed link can be constructed either as a one-way or two-way link. The objective is to minimize the total construction and transportation costs. Two different transportation costs are considered: (i) traffic is generated between any pair of nodes and the transportation cost is the total cost for the users and (ii) demand for service is generated at each node and a facility is to be located on a node to satisfy the demand. The transportation cost in this case is the total cost for a round trip from the facility to each node and back. We will consider two options in regard to the links between nodes. They can either be two-way only, or mixed, with both two-way and one-way (in either direction) allowed. When these options are combined with the two objective functions, four basic problems are created. These problems are solved by a descent algorithm, simulated annealing, tabu search, and a genetic algorithm. Extensive computational results are presented. Ó 2002 Elsevier Science Ltd. All rights reserved. 1. Introduction Network design problems have received increasing attention in the literature. General network design issues are discussed in Chiou (1999), Friesz et al. (1998), Mitchel and Smith (2001), Solanki et al. (1998), and Yang (1998). The network design-location interface is discussed in Melkote and Daskin (2001) and Pardalos and Du (1998). Our problem is as follows: a network with nodes and links (possibly only potential) is given. One may wish to build only part of the network in order to save construction costs while * Corresponding author. Tel.: +1-714-278-2712; fax: +1-714-278-5940. E-mail address: zdrezner@fullerton.edu (Z. Drezner). 0965-8564/02/$ - see front matter Ó 2002 Elsevier Science Ltd. All rights reserved. PII:S0965-8564(02)00014-9 Transportation Research Part A 37 (2003) 241–256 www.elsevier.com/locate/tra