Abstract
Decision makers often struggle with balancing the short-term gain and the long-term benefit. In bulk transport industry, due to the capacity constraint, carriers have to make shipping choices, i.e., either shipping high value goods (HVGs) with high freight but uncertain and limited business opportunities, or shipping low value goods (LVGs) with low freight but relatively certain and abundant shipping demand. Carriers often bear waiting costs in order to ship HVGs for high profit. A profit-maximizing carrier needs to make the shipping choice and waiting-time decision to achieve high profitability and capacity utilization in operations. We investigate the optimal shipping strategy for a carrier with limited capacity based on the trade-off analysis on each option under various situations where the shipping choices are made in single/multiple cycles with known/unknown arrival distributions of the shipping demand of HVGs. The shipping choice and the waiting-time decisions illustrate the trade-offs between the short-term gain and the long-term benefit in operational decision-making in the bulk transport industry.
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