An Integrated Planning/Pricing Decision Model for Rail Container Transportation

Abstract

Pricing and operation planning are two key issues for railway trainer transportation. Most of the researches tried to optimize the pricing or operation planning strategies separately. As in fact, these two factors are related to each other. The isolated research on either of them cannot get the optimal solution. In this paper, a bi-level model is proposed, which integrate the pricing, the operation planning, and competition from road transportation, to maximize the profit of rail operators. The lower level is designed to minimize the customer’s general cost, and the upper level is to maximize the revenue of rail operators. A descent algorithm based on the sensitivity analysis method is designed to solve the bi-level model. A real transportation network with 5 freight stations of China Railway Corporation is applied to evaluate the proposed model. The results show that our method can improve the rail operator’s profit about 14% compared with the fixed pricing policy under the competition freight transportation market.