Scheduled service network design with quality targets and stochastic travel times

We address the stochastic scheduled service network design problem with quality targets and uncertainty on travel times. This important problem, raising in the tactical planning process of consolidation-based freight carriers, has been little studied up to now. We define the problem considering quality targets for on-time operation of services and delivery of demand loads to destinations. We introduce a two-stage mixed-integer stochastic model defined over a space-time network, with quality targets modeled through penalties. We also propose an effective progressive-hedging-based meta-heuristic, based on a partial-decomposition concept aiming to address the challenges raised by the presence of flow-distribution decisions in the first-stage problem and by the flow-related degeneracy particular to network design. The results of an extensive numerical experimentation emphasize the worthiness of the formulation, as well as the very good performance of the proposed meta-heuristic when compared to a well-known commercial solver.