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Case Study - Modeling Rail Network Performance Using System Dynamics
A major freight railroad was seeking to better understand the potential impact of large volume shifts that might result, e.g., subsequent to a merger or because of changes in marketplace demand - such as the export coal market. Would it be best to invest in more locomotives, more track capacity, more terminal capacity, more railcars, or more people? Or some of each? After decades of cost cutting, determining where to invest wasn't easy, particularly given the complexity of network performance.

Approach
We suggested using system dynamics - a simulation modeling approach that focuses attention on feedback loops and causal relationships. Working together with leading experts in the field, we created a network-wide model that was able to accurately replicate historical performance levels in terms of key metrics like average miles per hour, railcar cycle time, dwell time in terminals, on-time performance, and number of locomotives and crews required. We were then able to use the model in a predictive fashion to explore potential alternative operational initiatives for managing the expected volume increases.

Value Added
The model has helped operations and marketing management communicate their expectations and capabilities clearly, and is rapidly becoming part of the installed base of planning tools at the client. A paper on the model and its development was presented at the Winter Simulation Conference in Arizona in December 1999.
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