Transportation problems are categorized into three levels: strategic, tactical, and functional, which have different level of budgets, level of decision makers, and horizon time. The problem of designing the rail network is one of the most important in the strategic level. In short, network design deals with how to allocate limited budget to expand the railway network infrastructure, in such a way that a certain objective function is optimized. The general form of the network design problem is a bi-level problem and falls in the category of NP-hard problems, which is difficult to solve even in small scales. In this article, a heuristic algorithm is presented to solve the problem of network design aiming at minimization of total expansion costs in the network. In each iteration, the algorithm performs a traffic assignment and extracts the overcapacity blocks of the network. Having the list of overcapacity blocks available, in a greedy approach, the algorithm selects the block with the minimum expansion cost and marginally increases its capacity. The process of iterations as such continues until the entire amount of input demand is transferred. This algorithm is implemented in Java and applied to the Iran’s railways network as the case study. Given the inherent multiobjective nature of in the problem, we also report "pseudo-pareto" solutions for the problem based on the two measures of network throughput and expansion costs and discuss the obtained solutions.
