Service network design is fundamentally crucial for railway express cargo transportation. The main challenge is to strike a balance between two conflicting objectives: low network setup costs and high expected operational incomes. Different configurations of these objectives will have different impacts on the quality of freight transportation services. In this paper, a bi-level programming model for the railway express cargo service network design problem is proposed. The upper-level model forms the optimal decisions in terms of the service characteristics, and the low-level model selects the service arcs for each commodity. The rail express cargo is strictly subject to the service commitment, the capacity restriction, flow balance constraints, and logical relationship constraints among the decisions variables. Moreover, linearization techniques are used to convert the lower-level model to a linear one so that it can be directly solved by a standard optimization solver. Finally, a real-world case study based on the Beijing–Guangzhou Railway Line is carried out to demonstrate the effectiveness and efficiency of the proposed solution approach.
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