This seminar is the first part of a two seminar session.

Abstract: Transportation systems are rather complex organizations which involve a great deal of human and material resources and which display intricate relationships and trade-offs among the various decisions and management policies affecting their different components. The freight transportation industry must achieve high performance levels in terms of economic efficiency and quality of service. Economic efficiency has always been a main goal because a transportation firm has to make profits while involving in an increasingly open and competitive cost-driven market, where cost is still the major decision factor in selecting a carrier or distribution firm. Service network design, as part of the tactical planning process in transportation systems, aims to ensure that the proposed services are performed as stated and customers’ requirements are satisfied, while operating in a rational, efficient, and profitable way.

This research looks at a stochastic, time-dependent, capacitated, multi-commodity service network design problem in which periodic, cyclic schedules are built. We find and illustrate the underlying structures of stochastic solutions by studying the optimal solutions to the stochastic network design problem and comparing them with deterministic counterparts. To achieve this, the following issues are addressed: Why does the solution select one particular route rather than others? What drives the solution to add/drop a service? Structural properties that characterize the stochastic solutions are found when addressing these issues and are then used to develop a pair-wise heuristic algorithm. The heuristic approach systematically increases the flexibility of the solution to hedge against demand uncertainty, and gradually nudges the solution towards having a more hedging and consolidation-based structure, which is more suitable in the stochastic environment.

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