Correspondence: Julian Pachon, Navitaire, Inc., 9130 Jollyville Rd, Suite 100, Austin, TX 78759, USA. Tel: +1 512 617 2120; Fax: +1 512 345-1974; E-mail: Julian.pachon@navitaire.com

¹Julian Pachon is the director of airline operations at Navitaire. He is the inventor of several airline planning and recovery optimisation software including SkySolver-Crew, SkySolver-Pax, SkySolver-Maintenance, SkyRoster and CrewResourceSolver. He received his bachelor and MS degrees in Industrial Engineering from Universidad de los Andes in Bogota, Colombia and his PhD degree in Operations Research from University of Miami, Coral Gables, FL. His teaching, research and consulting interests include airline and transportation planning, airline recovery, car rental logistics, revenue management, supply chain management and inter-modal logistics. He has published in top peer-reviewed journals such as Transportation Science, IIE Transactions, Interfaces and Quality Engineering.

²Eleftherios Iakovou is an Associate Professor of the Department of Industrial Engineering at the University of Miami. He is the founder and director of the Ferry Ellis International Logistics Research Institute and the Center for Advanced Supply Chan Management (a world class, innovative Center funded by IBM and Ryder System to promote executive education training and research in Supply Chain Management). He received his bachelor's degree in Mechanical Engineering from the Aristotle University of Thessaloniki and his MS and PhD degrees in Operations Research and Industrial Engineering from Cornell University, Ithaca, NY. His teaching, research and consulting interests include supply chain management, manufacturing and inter-modal logistics, inventory management and emergency response management.

³Chi Ip currently holds the position of Director of Operations Research at ANC Rental Corporation. Prior to joining ANC, he was on the faculty of the Department of Industrial Engineering at the University of Miami, where he still serves as adjunct faculty. He holds a PhD in Operations Research from Cornell University, where he did research in nonlinear optimization. He has developed various systems in the area of revenue management for ANC. These systems utilize statistical and optimisation models to allow the company to optimise revenue and contribution. He has also been involved in other projects that require his expertise in applying sophisticated mathematical models to enhance business processes. Such projects include data-mining, staff scheduling and fleet optimisation.

Received 1 May 2006.

Abstract

Fleet management at car rental companies aims to maximise yield by matching capacity to current and projected demand. This is accomplished via three decision-making phases. The first phase involves the grouping of car rental locations into pools, allowing car rental locations within a pool to share a fleet of vehicles. In the second phase, the types and quantities of vehicles to be acquired and returned to the car manufacturer and the geographical redistribution of vehicles among pools over the long-term planning horizon are defined for each pool. The final phase involves the daily operations in which the deployment of the fleet within each pool among its locations is defined. In this paper, we address all three phases as we encountered them in a major US car rental company. We develop appropriate solution methodologies for all three phases taking into account the hierarchical nature of the decision process. Finally, the application of the entire methodology is exhibited via a case analysis for the state of Florida.