2 research outputs found
Coordinating Pricing and Empty Container Repositioning in Two-Depot Shipping Systems
This paper studies joint decisions on pricing and empty container repositioning in two-
depot shipping services with stochastic shipping demand. We formulate the problem as a
stochastic dynamic programming (DP) model. The exact DP may have a high-dimensional
state space due to in-transit containers. To cope with the curse of dimensionality, we develop
an approximate model where the number of in-transit containers on each vessel is approxi-
mated with a fixed container flow predetermined by solving a static version of the problem.
Moreover, we show that the approximate value function is Lâ™®-concave, thereby characterizing
the structure of the optimal control policy for the approximate model. With the upper bound
obtained by solving the information relaxation-based dual of the exact DP, we numerically
show that the control policies generated from our approximate model are close to optimal
when transit times span multiple periods