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The Canadian Pacific Railway Transforms Operations by Using Models to Develop Its Operating Plans

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Autor:   •  July 9, 2018  •  Article Review  •  1,607 Words (7 Pages)  •  15 Views

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Summary of the Article

“The Canadian Pacific Railway Transforms Operations by Using Models to Develop Its Operating Plans” introduces a scheduled railway that uses advanced decision-support tools developed in-house and by MultiModal Applied Systems. These tools use operations research approaches, such as an optimal block-sequencing algorithm, a heuristic algorithm for block design, simulation, and time-space network algorithms for solving problems of locomotive assignment planning and empty cars distribution. The successful implementation helps Canadian Pacific Railway (CPR) create a pattern of low costs, high profitability, and excellent customer service in their business.

Around mid 20th century, most of large North American railways used a tonnage-based approach to dispatch trains, holding all trains until it had enough tonnage to fill them to capacity. It is probably that railways cancel or delay the train if the railway cannot fill enough railcars. For maximizing capacity and cost savings, CPR tried to maximize train sizes to reduce the total quantity of trains it operated. However, the tonnage-based approach has three drawbacks: (1) The railway considers economical operation primarily rather than customer demands. (2) The yards cannot adjust their operations on a repetitive schedule. (3) Demands for resources of crew and locomotive would also increase repositioning costs. In 1997, CPR tried to use a schedule-based approach to dispatch trains. It can satisfy changing traffic demands. However, there are four problems of scheduled strategies: (1) They need to operate trains although passenger volume is low. (2) They have to adjust the plan quickly based on systematically forecasting traffic levels by the day of the week. (3) They are required to receive each customer’s requirements in each corridor. (4) The schedule-based models require analyzing different alternatives depended on complex operations research software. For solving these problems, a joint team of CPR and MultiModal employees created the Integrated Operating Plan (IOP), and implemented it in late 1999. A blocking plan can be represented as a network, in which each link represents a group of railcars that move together from one yard to the next. CPR builds its train plan on the basis of the blocking plan, and then generates trip plan that specifies each block’s route. Therefore, CPR increases its profitability by cutting total transit time, reducing fuel consumption, balancing workloads among yards, reducing railcar dwell time in yards, and increasing departure frequencies.

For the problem of planning a satisfying railway operation, the primary variables are the blocks and trains, and the constraints are the capacities of yards and trains, the requirements of customers, and the availability of various assets. The object of the problem is profit maximization. CPR and MultiModal use five steps to solve the problem effectively.

To begin with forecasting traffic, CPR combines historical traffic data and revenue forecast to generate an automated forecasting system, which can provide accurate traffic volumes. Secondly, researchers follow a MultiRail-based process to develop the blocking plan. They use block sequences which are generated by using algorithm to estimate the expected block volumes. Then researchers find bypasses that can eliminate intermediate switching, and identify circuity issues. The block-sequencing algorithm used in MultiRail reduces the number of rules by two orders of magnitude and thus enables the solution strategy employed. Thirdly, for developing a train plan, researchers use MultiRail’s heuristic algorithms to identify large-volume blocks and to create trains around those blocks. And then they assign the remaining blocks to balance train size. Next, researchers use several algorithms to accurately determine train frequency, running times, intermediate arrival and departure times, connection times, and demands for crew and locomotive. The authors of “The Canadian Pacific Railway Transforms Operations by Using Models to Develop Its Operating Plans” also provide us the standard of a good train plan. The plan should minimize the total number of trains to reduce costs, but at same time, the plan has to provide frequent service to satisfy customers’ demands. The train planners need to consider the capacities of yards. MultiRail is really useful for train planners to create a great train plan because it can provide feedback on all of these criteria quickly. Fourthly, researchers use Multi-Rail’s SuperSim tool to calculate the detailed trip plan, traffic movement, and requirements of blocks and trains. In SuperSim, researchers can speed the whole process by using various techniques, and obtain the outputs about yard and train workloads by the day of week and time of day. Based on these results, researchers can adjust the operating plan. For example, train planners can make schedule adjustments to improve car connections. Conventional railway trip-planning tools generate plans individually. However, in this case, researchers can use a single aggregation processing step to advance many cars between these two locations, greatly reducing simulation run time. The last step is that developing the crew and locomotive cycle plans by using CPR’s locomotive-planning system and employing a time-space network.

As a result, CPR was successful to transform to be a more profitable, competitive and agile company by adopting of the management science tools and operation research tools. The cost of crew and fuel was reduced dramatically. By increasing carload train size by 10%, the company saved 18.8% on payroll while the gross-tone-miles even increased 13.8%. CPR’s success has attracted other railroads around the world. CPR never stop searching for areas that can be improved. Making operation plan better is just the start. CPR aims to institutionalized the whole organization to exploit the potential.

Value of the Article with Respect to the Business Community

In this case, after implementing the scheduled operations, the company has been benefited financially by reducing cost base. CPR adopted an innovative approach to facilitate operations and to serve its customers. In my opinion, the successful management and operation-related innovations can be applied to other key functions in other industries. First of all, company should learn from CPR’s process of operation process improvement. Defining the objectives before even diving into the discussion of any details of solutions is fairly important. Different objectives have corresponding solutions and the company need to think about the importance of each objective, which might be weights in decision making. After that, how to balance between the outcomes of these objectives to achieve the optimal performance will be discussed in planning. Secondly, we can extract values from the article that makes us aware of the importance of creative and innovative algorithms. Using the algorithm decision-making tools, business community would find it much easier to analyze data in its current systems, find bottlenecks and optimize the operation process. In this case, by adopting blocks planning, the company was able to reduce the idle time in the years. For most companies, they understand the inefficiency in the operation, however, they are not able to come up an feasible plan to solve the issues. The management team should frequently ask the key questions such as which process might cause idle time and queuing problem and which ways would be most effective in terms of cost and outcome.

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