Critical Decision Factors When Making a Cost-Effective Train Fleet Turnover : A Study in The Swedish Railway Sector

University essay from KTH/Hållbar produktionsutveckling (ML)

Author: Roman Zandi; Roy Khazzaka; [2022]

Keywords: ;

Abstract: Sustainability and availability are two essential terms for many industries when making changes within the supply chain and making decisions regarding which technical solution is most costeffective and brings the most value to the organization. Since these two topics have been growing in recent years, decision-makers need to understand the level of detail and the value these two areas can bring to an organization. Regarding the railway domain, it is crucial to know when it is most cost-effective to conduct a train fleet turnover and what decision parameters need to be considered. This thesis aims to determine which critical decision factors need to be considered by decision-makers and show an illustrative Life Cycle Cost solution for when a train fleet turnover is most cost-effective. Furthermore, a mean value of how the railway domainis currently working with the decision factors will be addressed in this thesis. This analysis will illustrate which decision factors are being overworked and which decision factors need to be addressed in a more detailed manner to create an optimal working method. The thesis has been achieved by conducting a comprehensive literature review, interviewing decision-makers within the railway domain, and analyzing the sustainability and availability aspects of how the different organizations handle these two areas. Customer Satisfaction, Utilization Rate, and Failure Rate were the highest-rated decision factors to consider when designing for a cost-effective train fleet turnover. Maintenance Contract and Environmental Health and Security are the two deciding factors not being highlighted at the same level compared to the other decision factors. However, this does not negate the importance of these two factors. Furthermore, an illustrated Life Cycle Cost scenariohas been devised to link the literature to practice, indicating if a decision-maker has chosen to reinvest in the current train fleet, when is it unprofitable to keep the aging train fleet alive, and more cost-effective to buy a new one. Since the example does not represent the reality of all railway actors, it can be used as a template for indicating the break-even point between reinvestment and acquisition cost, making the process more transparent and effective. By creating a standardized approach to working with critical decision factors, decision-makers should aim for minimal bias and low variance among the decision factors, meaning they should consider all of them equally. In conclusion, the railway domain considers both sustainability and availability. To optimize the break-even point between the costs indicated in this report, decision-makers must break down all costs in the supply chain in detail in combination with sustainability and availability and combine them with the critical decision factor to not forget an essential factor while designing for a train fleet turnover.

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