A Synthesis of Tactical Fleet Planning Models for the Car Rental Industry

• Published in: IIE transactions 2003-09, Vol.35 (9), p.907-916
• Main Authors: Pachon, Julian E., Iakovou, Eleftherios, Ip, Chi, Aboudi, Ronny
• Format: Article
• Language: English
• Subjects: Automobile rentals; Customer satisfaction; Decision making models; Demand; Heuristic; Motor vehicle fleets; Optimization techniques; Planning; Rental services; Studies
• ISSN: 0740-817X; 2472-5854; 1545-8830; 2472-5862
• DOI: 10.1080/07408170304409

Daily tactical planning of the vehicle fleet is critical for a car rental business. In this decision-making process planners have to address the conflicting concerns of field management, namely, assuring adequate vehicle availability to satisfy customer demand while maintaining a high degree of utilization for each car in the fleet; this is achieved by the appropriate fleet deployment among car rental locations. This work was inspired by a series of problems encountered by the decision-makers of a major US car rental company. We first present the formulation of the tactical fleet planning model. Based on its structure, we decompose the model into a fleet deployment model and a transportation model. We develop optimal conditions for both subproblems and then we present a heuristic to reduce the gap from optimality for the complete model. We further present the application of the entire solution methodology via a case analysis for the State of Florida. Finally, we develop three extensions to the fleet deployment model to capture the cost of unsatisfied demand and fleet surplus, the service level, and a general price-demand function. We provide optimal closed-form conditions for all the extensions.