A User-Oriented Freight Railroad Operating Policy

Two different ways of optimizing a freight railroad system are investigated. In the first, called the "traditional policy," the railroad operating cost is minimized for a given traffic demand. In the second, called the "user-oriented policy," the total cost of transportation is minimized, i.e., the sum of the railroad operating cost and the losses borne by the shippers that are due to the level of service provided. These losses result mainly from the devaluation of the shipments during transit and reflect the value of a certain level of service to the shippers. An example is calculated by means of a computer program developed by the author, and the values of the system variables obtained for each policy are compared. Finally, it is shown that the user-oriented policy would be advantageous to shippers and railroad alike.