Simulation and Optimization at Kansas City Southern Railway: Equipping Management for Success

This study addressed the need for a model of Kansas City Southern Railway (KCS) to provide insight to decision makers. A simulation model was developed to capture the key processes, the limiting resources, and the major relationships influencing the successful operation of the KCS system. The simulation model was used to evaluate alternative car management policies on the basis of timely, reliable, and affordable customer service. Optimization was proposed as a tool to enable car managers to minimize the cost of moving empty cars to meet demand. Six alternative policies were developed by incrementally increasing the portion of KCS cars managed using optimization. This study concludes that KCS could provide more timely, reliable, and affordable customer service by managing the entire fleet of cars using optimization. KCS should equip car managers with an optimization tool for making more cost-effective car assignments. Furthermore, KCS should employ the simulation model to identify and exploit additional efficiencies that could improve profitability of the railroad.

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