Optimization model for chemical tank container management

Abstract

Owing to lack of appropriate tool for operational decision, this study aims to develop an optimization model for chemical tank container management using linear programming methodology. The objective function is to maximize net profit while taking container routing, empty container repositioning, and container spot leasing into account as decision variables. The basic constraints used in the model are related to spot demand accommodation and conservation of tank container flows. On top of that, additional repositioning constraints and financial incentives may be utilized to promote empty container repositioning, hence, allow the model to behave alike actual operation. The model results show that empty container repositioning cost is reduced by prevention of unnecessary empty container repositioning. Long-distance trucking to pick-up tank containers from other ports may also be eliminated. These ultimately turn into higher profit. That is to say, the model give 5.76% higher profit compared to actual operation. In addition to that, shadow prices obtained from sensitivity report add more insight on identification of each origin-destination route profitability as well as a limitation of potential increased volume of demands under optimal operational decision derived from the model. These highlight the advantages of having the use of optimization model as supportive evidence over the merely use of spreadsheet and individual adjustments for tank container management.