IDEAS home Printed from
   My bibliography  Save this article

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


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


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

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Redmer, Adam, 2009. "Optimisation of the exploitation period of individual vehicles in freight transportation companies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(6), pages 978-987, November.
    2. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
    3. Nejat Karabakal & Jack R. Lohmann & James C. Bean, 1994. "Parallel Replacement under Capital Rationing Constraints," Management Science, INFORMS, vol. 40(3), pages 305-319, March.
    4. Simms, B. W. & Lamarre, B. G. & Jardine, A. K. S. & Boudreau, A., 1984. "Optimal buy, operate and sell policies for fleets of vehicles," European Journal of Operational Research, Elsevier, vol. 15(2), pages 183-195, February.
    5. Suzuki, Yoshinori & Pautsch, Gregory R., 2005. "A vehicle replacement policy for motor carriers in an unsteady economy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(5), pages 463-480, June.
    6. Jin, Di & Kite-Powell, Hauke L., 2000. "Optimal fleet utilization and replacement," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 36(1), pages 3-20, March.
    7. Oliver Gao, H. & Stasko, Timon H., 2009. "Diversification in the driveway: mean-variance optimization for greenhouse gas emissions reduction from the next generation of vehicles," Energy Policy, Elsevier, vol. 37(12), pages 5019-5027, December.
    8. Guy T. de Ghellinck & Gary D. Eppen, 1967. "Linear Programming Solutions for Separable Markovian Decision Problems," Management Science, INFORMS, vol. 13(5), pages 371-394, January.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. 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.
    2. repec:eee:transb:v:103:y:2017:i:c:p:158-187 is not listed on IDEAS
    3. repec:eee:jaitra:v:68:y:2018:i:c:p:76-85 is not listed on IDEAS


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:46:y:2012:i:8:p:1216-1226. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.