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The University of Southampton
CORMSIS Centre for Operational Research, Management Sciences and Information Systems

CORMSIS Seminar "Optimal economic ship speeds, the chain effect, and future profit potential" - Fangsheng Ge Event

10 February 2022
Please email Huan Yu for a link to the virtual seminar

For more information regarding this event, please email Huan Yu at .

Event details

In this research, we study at which speeds an oceangoing ship should ideally travel on each of a series of legs of a journey as to maximize the Net Present Value (NPV) of the ship. A novel class of models for the ship speed optimization problem, which we refer to as P(n, m, G_o), is presented. It is based on incorporating cash-flow functions and is flexible in modelling journey structures of variable composition. By studying properties of optimal leg speeds within this NPV framework, we demonstrate two novel elements of ship speed optimization: (a) When executing a series of identical journeys, optimal ship speeds from one execution of the journey to the next are shown to change. We refer to this as the chain effect. (b) The ship’s optimal speed is in general highly dependent on the decision maker’s views on the ship’s future profit potential (FPP). We present two efficient algorithms to solve the models. The methodology is applied to case studies based on the literature and the results are compared with classic model formulations. Net Present Value Equivalence Analysis (NPVEA) shows how the proposed framework increases understanding of the applicability and limitations of these classic model formulations. The use of the FPP concept is recommended in speed optimization and job selection models.

Speaker information

Dr Fangsheng Ge, a Lecturer in Management Science at Southampton Business School. His research focuses on how operational research can improve the maritime shipping. In particular, he is interested in providing deeper understandings of shipping activities with mathematical modelling. His work has been published in Transportation Research Part B: Methodological.

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