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Developing green fleet management strategies: Repair/retrofit/replacement decisions under environmental regulation

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  • Stasko, Timon H.
  • Oliver Gao, H.

Abstract

The considerable cost of maintaining large fleets has generated interest in cost minimization strategies. With many related decisions, numerous constraints, and significant sources of uncertainty (e.g. vehicle breakdowns), fleet managers face complex dynamic optimization problems. Existing methodologies frequently make simplifying assumptions or fail to converge quickly for large problems. This paper presents an approximate dynamic programming approach for making vehicle purchase, resale, and retrofit decisions in a fleet setting with stochastic vehicle breakdowns. Value iteration is informed by dual variables from linear programs, as well as other bounds on vehicle shadow prices. Sample problems are based on a government fleet seeking to comply with emissions regulation. The model predicts the expected cost of compliance, the rules the fleet manager will use in deciding how to comply, and the regulation’s impact on the value of vehicles in the fleet. Stricter regulation lowers the value of some vehicle categories while raising the value of others. Such insights can help guide regulators, as well as the fleet managers they oversee. The methodologies developed could be applied more broadly to general multi-asset replacement problems, many of which have similar structures.

Suggested Citation

  • Stasko, Timon H. & Oliver Gao, H., 2012. "Developing green fleet management strategies: Repair/retrofit/replacement decisions under environmental regulation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1216-1226.
    • Handle: RePEc:eee:transa:v:46:y:2012:i:8:p:1216-1226
    DOI: 10.1016/j.tra.2012.05.012
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    References listed on IDEAS

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    Cited by:

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    3. Guerrero, Sebastian E. & Madanat, Samer M. & Leachman, Robert C., 2013. "The Trucking Sector Optimization Model: A tool for predicting carrier and shipper responses to policies aiming to reduce GHG emissions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 59(C), pages 85-107.
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    5. Lee, Kuen-Chang & Tsai, Wen-Hsien & Yang, Chih-Hao & Lin, Ya-Zhi, 2018. "An MCDM approach for selecting green aviation fleet program management strategies under multi-resource limitations," Journal of Air Transport Management, Elsevier, vol. 68(C), pages 76-85.
    6. Winkelmann, Jonas & Spinler, Stefan & Neukirchen, Thomas, 2024. "Green transport fleet renewal using approximate dynamic programming: A case study in German heavy-duty road transportation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 186(C).

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