A Branch and Bound Algorithm for Bi-level Discrete Network Design Problem

Discrete network design problem (DNDP) is generally formulated as a bi-level programming. Because of non-convexity of bi-level formulation of DNDP which stems from the equilibrium conditions, finding global optimal solutions are very demanding. In this paper, a new branch and bound algorithm being able to find exact solution of the problem is presented. A lower bound for the upper-level objective and its computation method are developed. Numerical experiments show that our algorithm is superior to previous algorithms in terms of both computation time and solution quality. The conducted experiments indicate that in most cases the first incumbent solution which is obtained within a few seconds is superior to the final solution of some of previous algorithms.