Empty Container Management in Multi-Port System with Inventory-based Control

One of challenges that shipping companies face today is to effectively manage empty containers in order to meet customer demands and to reduce operation cost. This paper considers the joint empty container repositioning and container fleet sizing problem in a multi-port system with inventory-based control mechanism. A single-level threshold policy with repositioning rule in terms of minimizing the repositioning cost is proposed to manage empty containers. The objective is to optimize the fleet size and the parameters of the policy to minimize the expected total cost per period. Taking advantage of an interesting property of the problem, this paper proposes two approaches, a non-linear programming and a gradient search approach to solve the problem. From a methodological perspective, this paper deploys infinitesimal perturbation analysis method to improve computational efficiency. A numerical study demonstrates the effectiveness of the proposed policy and provides some managerial insights for shipping companies in managing empty containers. [1]