UCTC - DISS - 2010 - 07 Optimal Intercity Transportation Services with Heterogeneous Demand and Variable Fuel Price Megan

In this thesis we examine how fuel price variation affects the optimal mix of services in intercity transportation. Towards this end, we make two main contributions. The first is the development of an analytic total logistics cost model of intercity transportation, which is sensitive to fuel price and incorporates multiple classes of vehicles serving passengers with differentiated values of time. The second is an empirical investigation of the cost relationship between fuel price and operating cost for intercity transportation vehicles. The analytic total logistics cost models are combined with the empirical models to gain insights into the impact of fuel price on optimal service mixes in representative corridors. We consider a scheduled intercity transportation corridor on which different classes of intercity transportation vehicles serve passengers with differentiated values of time. In determining optimal service mix, we consider a central planner choosing the vehicles and service frequencies that provide the minimum total logistics cost for an intercity transportation corridor. The total logistics cost is the sum of the two main intercity transportation cost components: vehicle operator cost and passenger cost. In considering operating and passenger costs together, we balance cost efficiency and level of service of alternative vehicles with different cost structures and service attributes. In developing the total logistics cost model, we seek both analytic insights and numerical examples. To keep the model analytically tractable while at the same time incorporating multiple objectives, including fuel cost, operating cost, schedule delay, and line-haul time, we incorporate the continuum approximation method from logistics. In employing the continuum approximation, discrete variables are considered continuous, leading to analytic functions from which we can evaluate qualitatively the relationships among fuel price, service level, and comparative vehicle cost. An investigation of the analytic model suggests that, while a fuel price increase would increase costs for any corridor, the rate of cost increase for a corridor served by a mix of vehicle technologies diminishes more rapidly with fuel price. We also find that an increase in fuel price causes vehicles to become more differentiated with respect to the value of time of the passengers they serve. In other words, under high fuel prices the total logistics cost can be minimized by effectively segregating passengers on different types of vehicles according to their values of time. 2 We complement the analytic findings with an empirical investigation of the cost relationship between fuel price and operating cost for different …