Rail Car Fleet Design: Optimization of Structure and Size

We develop a model to determine the optimal structure and size of a rail car fleet at a chemical company under uncertainty in demand and travel times as well as substitution between rail car types. First, we formulate an MILP model that accounts for the substitution relations between the types and minimizes the total direct rail car cost under given rail car availability constraints and a predefined maximum number of types. Second, based on the fleet structure obtained by the MILP model, the fleet size is computed by using an approximation from inventory theory that considers the existing uncertainties. Compared to the current approach of the rail car fleet management team, the model produces a reduction in safety stock of 120 rail cars and thus direct cost savings of 8% as well as further indirect cost savings due to a smaller number of rail car types, which reduces the switching effort of the rail cars on the storage tracks.