¹International Shipping & Logistics Group, Business School, University of Plymouth, Plymouth PL4 8AA, UK. E-mail: dongping.song@plymouth.ac.uk

Abstract

This paper considers the empty container management problem in a cyclic shipping route. The objective is to seek the optimal empty container repositioning policy in a dynamic and stochastic situation by minimising the expected total costs consisting of inventory holding costs, demand lost-sale costs, lifting-on and lifting-off charges, and container transportation costs. A three-phase threshold control policy is developed to reposition empty containers in cyclic routes. The threshold values are determined based on the information of average customer demands and their variability. A non-repositioning policy and three other heuristic policies are introduced for purposes of comparison. Simulation is used to evaluate the performance of empty repositioning policies. A range of numerical examples with different demand patterns; degrees of uncertainty, and fleet sizes demonstrate that the threshold policy significantly outperforms the heuristic policies.