An optimization approach to a two-stage replenishment strategy in cruise liner operations under dynamic demand

Liling Huang and Jiaqi Yang

Journal of the Operational Research Society, 2021, vol. 72, issue 9, 1992-2003

Abstract: Due to the globalization of cruise tourism, in the early stage of cruise liner operation, contracting purchases with suppliers in advance incurs cost savings due to price reduction for the first replenishment of food and beverage (F&B) items. To meet the onboard customer demand of a cruise liner and deal with uncertainty in demand, the second replenishment is conducted from a spot market at an intermediate port if needed. Applying Bayesian updating theory to cases of incomplete information, this article studies the optimal strategy for two-stage replenishment in cruise liner operations, based on updating demand information under dynamic demand, and establishes a model with two-stage profit maximization as the objective function. Then, incomplete information updating theory is applied to assist in solving this problem. Finally, a numerical example is given to analyse the influence of parameter variation on the sensitivity of the results. The results show that an effective replenishment strategy for cruise ships must take into consideration the trade-offs between both replenishment approaches under different parameters.

Date: 2021
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DOI: 10.1080/01605682.2020.1750312

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