1. Optimal Fueling Strategies for Locomotive Fleets in Railroad Networks Seyed Mohammad Nourbakhsh Yanfeng Ouyang 1 William W. Hay Railroad Engineering Seminar February 17, 2012

2. Outline Background Model Formulation Optimality Properties and Solution Techniques Case Studies Conclusion 2

3. Fuel Price 3 Railroad fuel consumption remains steady Crude oil price sharply increases in recent years Fuel-related expenditure is one of the biggest cost items in the railroad industry

4. Fuel Price Fuel (diesel) price influenced by: –Crude oil price –Refining –Distribution and marketing –Others 4

5. Fuel Price Fuel price vary across different locations Each fuel station requires a long-term contractual partnership –Railroads pay a contractual fee to gain access to the station –Sometimes, a flat price is negotiated for a contract period 5 US national fuel retail price, by county, 2009 5

6. Locomotive Routes in a Network 6 Candidate fuel station Contracted fuel station

7. Motivation Usage of each fuel station requires a contractual partnership cost Hence, should contract stations and purchase fuel where fuel prices are relatively low (without significantly interrupting locomotive operations) –In case a locomotive runs out of fuel, emergency purchase is available anywhere in the network but at a much higher price –Each fueling operation delays the train 7

8. The Challenge 8

9. 9 $ $ $ $ $ $ $ $ $

10. 10 Fuel cost vs. contract cost –Too few stations = high fueling cost (e.g., emergency purchase)

11. The Challenge 11 Fuel cost vs. contract cost –Too many stations = high contracting costs

12. Problem Objective To determine: –Contracts for fueling stations –Fueling plan for all locomotives Schedule Location Quantity To minimize: –Total fuel-related costs: Fuel purchase cost Delay cost Fuel stations contract cost 12 ?? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

13. Outline Background Model Formulation Optimality Properties and Solution Techniques Case Studies Conclusion 13

14. Notation 14 Set of candidate fuel stations, N = {1,2,…, |N|} Set of locomotives, J = {1,2,…, |J|} Sequence of stops for locomotive j, S j = {1,2,…, n j }, for all j J i=1i=2i=3 i=|N|i=|N|–1 i For any location i c i = Unit fuel cost a 1 = Delay cost per fueling stop a 2 = Contract cost per fuel station per year M i = Maximum number of locomotives passing p=Unit fuel cost for emergency purchase (p>c i for all i)

15. Notation 15 j =1 j=|J|j Set of candidate fuel stations, N = {1,2,…, |N|} Set of locomotives, J = {1,2,…, |J|} Sequence of stops for locomotive j, S j = {1,2,…, n j }, for all j J For any locomotive j b j =Tank capacity r j =Fuel consumption rate n j =Number of stops f j =Travel frequency g j =Initial fuel

16. Notation Set of candidate fuel stations, N = {1,2,…, |N|} Set of locomotives, J = {1,2,…, |J|} Sequence of stops for locomotive j, S j = {1,2,…, n j }, for all j J 16 l s j = Distance between the s th and (s+1) th fuel stations that locomotive j passes j j =1 j=|J| 1 2 s s+1 njnj 1 2 3 n1n1 s

17. Parameters Attributes of the Network –l s j =Distance between the s th and (s+1) th fixed fuel stations of locomotive j –c i =Unit fuel cost at fixed fuel station i –p =Unit fuel cost for emergency purchase –  1 =Delay cost per fueling stop –  2 =Contract cost per fuel station per year –M i =Maximum number of locomotives passing station i Attributes of the Locomotive –b j =Tank capacity for locomotive j –r j =Fuel consumption rate for locomotive j –n j =Number of stops for locomotive j –f j =Travel frequency for locomotive j –g j =Initial fuel at of locomotive j 17

18. Decision Variables For each station, contract or not? –z i = 1 if candidate fuel station i is contracted and 0 otherwise For each locomotive, where to stop for fuel? –x s j = 1 if locomotive j purchases fuel at its s th station and 0 otherwise –y s j = 1 if locomotive j purchases emergency fuel between its s th and (s+1) th station and 0 otherwise How much to purchase? –w s j =Amount of fuel purchased at stop s of locomotive j –v s j =Amount of emergency fuel purchased between the s th and (s+1) th stations of locomotive j 18

19. Formulation min s.t. Tank capacity never exceeded at fuel stations Must stop before purchasing Never run out of fuel Must contract fuel stations for usage Integrality constraints Non-negativity constraints Tank capacity never exceeded at emergency purchase Fueling cost + delay cost + contract cost 19

20. Problem Characteristics The MIP problem is NP hard… –Integration of facility location and production scheduling The problem scale is likely to be large – of integer variables, of constraints –For |J|=2500 locomotives each having n j =10 stops among |N|=50 fuel stations, there are 50,050 integer variables and 100,050 constraints Commercial solver failed to solve the problem for real applications Hence, to solve this problem –Derive optimality properties to provide insights –Develop a customized Lagrangian relaxation algorithm 20

21. Outline Background Model Formulation Optimality Properties and Solution Techniques Case Studies Conclusion 21

22. Theoretical Findings 22 Optimality Condition 1 There exists an optimal solution in which a locomotive stops for emergency fuel only when the locomotive runs out of fuel. Fuel station s 1 Fuel station s 2 Fuel Level Optimal emergency fueling location station Tank Capacity Not optimum

23. Theoretical Findings Station Fuel level 1 Optimality Condition 2 There exists an optimal solution in which a locomotive purchases emergency fuel only if the following conditions hold: – Its previous fuel purchase (from either an emergency or fixed station) must have filled up the tank capacity – If the next fuel purchase is at a fixed stations, then the purchased fuel should be minimum; i.e., the locomotive will arrive at the next station with an empty tank 23 s+1 s Tank capacity Not optimum

24. Station Fuel level 1 s+1s Tank capacity Theoretical Findings 24 Optimality Condition 3 If a locomotive purchases fuel at two fixed fueling stations s 1 and s 2 (not necessarily adjacent along the route) but no emergency fuel in between, then there exists an optimal solution in which the locomotive either departs s 1 with a full tank, or arrives at s 2 with an empty tank. Not optimal Either of these two is optimal

25. Lagrangian Relaxation Relax hard constraints: Then add them to the objective function with penalty: Structure of the constraints: 25 Constraints Variables Fueling plan for locomotive 1 Facility location and fueling constraints Fueling plan for locomotive 2 Fueling plan for locomotive j

26. Formulation of Relaxed Problem min s.t. 26

27. Relaxed Problem After relaxing hard constraints the remaining problem could be decomposed into sub-problems –Each sub-problem solves the fueling planning for each locomotive where z j (u) is optimal objective function of j th sub-problem 27 relaxed objective

28. Sub-problem for the j th Locomotive min s.t. 28

29. Sub-problem for Individual Locomotive Three types of possible “optimal” fuel trajectory –Type a: From one station to nonzero fuel at another station –Type b: From one station to zero fuel at another station, without emergency purchase –Type c: From one station to zero fuel at another station, after one or more emergency fuel purchases Station Fuel level 2 s–1 bjbj 1 0 s (a) (b) (c) rjrj 29

30. Shortest Path Method Station State 2 s–1 bjbj 1 0 s (a) (b) (c) (s, 1) (s, ) (s,)(s,) (a) gjgj 30 We find a way to apply a simple shortest path method to solve the sub-problem

31. Implementation of LR Algorithm Update the multiplier Update step size Update upper bound stop YesNo 31

32. Upper Bound (Feasible Solution) Solution 1: –Re-examine all fuel stations and eliminate those not used by the current fueling plan Solution 2: –Solve another fueling plan, using the fuel stations obtained from the solution of the relaxed problem Choose the smaller value and update the upper bound if possible 32

33. Discussion Due to railroad companies policy initial fuel can also considered as decision variable. In integer programming there would be no changes. In shortest path method some shortest path for same initial and remaining fuel and we chose the minimum amount of them. 33

34. Outline Background Model Formulation Optimality Properties and Solution Techniques Case Studies Conclusion 34

35. Test Case ($5) ($3) ($5) ($2) ($4)($2.5)($2) ($3) ($3.5) 1000 1050 1100 10501500100010501100 1050 11001550 1050 11001600 1050 1000 1050 1000 1100 35 Network Information

36. Test Case 36 Locomotive Route Information

37. Test Case 12 nodes, 8 locomotives  1 =100,  2 =10,000 Tank capacity=2500 Different fuel price for fixed stations between $2 to $5 and $7 for emergency Frequency assumed 1 for all locomotives Consumption rate assumed 1 for all locomotives 37

38. Optimal Fuel Stations ($5) ($3) ($5) ($2) ($4) ($2.5)($2) ($3) ($3.5) 38

39. Optimal Fueling Plan: Locomotive 1 $5 $3 $2 $4 $2.5$2 $3 $3.5 $5 (1000) (1700) (2500) (750) (2500) 39

40. Optimal Fueling Plan: Locomotive 2 $5 $3 $2 $4 $2.5 $2 $3 $3.5 $5 (650) (2100) 40 (1000) (2500)

41. Optimal Fueling Plan: Locomotive 3 5 3 3 2 4 $2.5 2 2 3 3.5 5 41 (1000) (2500) (1000) (1050) (1800) $5 $3 $2 $4 $2 $3 $3.5 $5

42. Optimal Fueling Plan: Locomotive 4 5 3 3 2 4 2.5 2 2 2 3 3.5 5 42 (1500) (2500) (1250) (1550) (1500) $5 $3 $2 $4 $2.5 $2 $3 $3.5 $5

43. Locomotive 5 5 3 3 2 4 2.5 2 2 2 3 3.5 5 43 (2100) (2500) (2100) (1750) (2050) $5 $3 $2 $4 $2.5 $2 $3 $3.5 $5

44. Optimal Fueling Plan: Locomotive 6 5 3 3 2 4 2.5 2 2 2 3 3.5 5 (2100) (1700) 44 (2100) (2500) $5 $3 $2 $4 $2.5 $2 $3 $3.5 $5

45. Optimal Fueling Plan: Locomotive 7 5 3 3 2 2.5 2 2 2 3 3.5 5 (1050) (1100) (1150) (2500) (1050) 45 $5 $3 $2 $4 $2.5 $2 $3 $3.5 $5

46. Optimal Fueling Plan: Locomotive 8 5 3 3 2 4 2.5 2 2 2 3 3.5 5 (0) (1050) (1650) (2500) (1050) 46 $5$3 $2 $4 $2.5 $2 $3 $3.5 $5

47. Total Fuel Consumption ($5)($3) ($5) ($2) ($4) ($2.5) ($2) ($3) ($3.5) 8700 15150 4950 6100 12650 6700 9,550 47

48. Lagrangian Relaxation Convergence 48

49. Real World Case Study Full railroad network of a Class-I railroad company 50 potential fuel stations Thousands of predetermined locomotive trips (per week) Fuel price from $1.9 - $3.0 per gallon with average $2.5 per gallon Tank capacity 3,000 - 5,000 gallons Consumption rate 3 - 4 gallons per mile Contracting cost of fuel stations $1 - $2 billion per year 49

50. Real World Case Study Algorithm converges after 500 iterations in 1200 CPU seconds The optimality gap was less than 6% This model can efficiently reduce the total cost of the system 50

51. Real World Case Study Solution 1: Bench- mark (current industry practice) Solution 2: Optimal fueling schedule using all current stations Solution 3: Global optimum (using an optimal subset of stations) 51

52. Outline Background Model Formulation Optimality Properties and Solution Techniques Case Studies Conclusion 52

53. Conclusion A Mixed Integer Programming (MIP) model –Integrates fuel schedule problem and station (location) selection problem –Considers fuel cost, delay, and fuel station contracting costs LR and other heuristic methods are developed for large-scale problem with good computational performance We developed a network representation and shortest path method for solving scheduling sub-problems This problem was later used as a competition problem at INFORMS Railway Applications Section (RAS) 53

54. Future Research Stochastic parameters instead of deterministic parameters Routing the locomotive instead of having pre-route locomotives Dynamic planning model under time-varying condition Apply these solution technique for other mode of transportation Consider time constraints for using fuel stations 54

55. Railway Application Section (RAS) 2010 Problem solving competition –Introduce participants to railroad problems Collaborated with CSX, BNSF,NS, UP Modification of this problem Case study for medium scale size problem 55

56. Thank you. nourbak1@illinois.edu yfouyang@illinois.edu 56