Rail freight transportation service network design with mixed blocking policies: Formulation and solution methods

In the current China railway system, the freight transportation service network is demand category oriented and is designed by using a hierarchical approach. This simplifies the design procedure, but reduces the flexibility and optimality of the plan. To make full use of the limited railway capacity and to improve the service flexibility and quality, this paper addresses the freight service network design problem with simultaneous consideration of mixed blocking policies and mixed service classes for heterogeneous demands. A mixed integer linear programming model is developed for the problem to maximize the operator's total transportation profit. Furthermore, a two-stage decomposition framework is proposed to solve the optimization model, where both exact and heuristic algorithms are employed. Extensive computational experiments on artificial and real-world instances indicate that the proposed solution approaches can generate high-quality solutions within reasonable time frame. Moreover, the mixed blocking policies could attract more freight demands and tend to result in higher profits, compared to the single blocking policy.