A stochastic programming formulation for strategic fleet renewal in shipping

Rikard Bakkehaug, Eirik Stamsø Eidem, Kjetil Fagerholt and Lars Magnus Hvattum

Transportation Research Part E: Logistics and Transportation Review, 2014, vol. 72, issue C, 60-76

Abstract: Shipping companies repeatedly face the problem of adjusting their vessel fleet to meet uncertain future transportation demands and compensating for aging vessels. In this paper, a new multi-stage stochastic programming formulation for strategic fleet renewal in shipping is proposed. The new formulation explicitly handles uncertainty in parameters such as future demand, freight rates and vessel prices. Extensive computational tests are performed, comparing different discretizations of the uncertain variables and different lengths of the planning horizon. It is shown that significantly better results are obtained when considering the uncertainty of future parameters, compared to using expected values.

Keywords: Maritime transportation; Fleet size and mix; Uncertainty; Long-term planning (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1366554514001641
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:72:y:2014:i:c:p:60-76

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/bibliographic
http://www.elsevier. ... 600244/bibliographic

DOI: 10.1016/j.tre.2014.09.010

Access Statistics for this article

Transportation Research Part E: Logistics and Transportation Review is currently edited by W. Talley

More articles in Transportation Research Part E: Logistics and Transportation Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().