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FROM ruby:2.3.1

# Install dependencies
RUN apt-get update -qq && apt-get install -y build-essential libpq-dev nodejs

# Set an environment variable where the Rails app is installed to inside of Docker image:
ENV RAILS_ROOT /var/www/app_name
RUN mkdir -p $RAILS_ROOT

# Set working directory, where the commands will be ran:
WORKDIR $RAILS_ROOT

# Setting env up
ENV RAILS_ENV='production'
ENV RACK_ENV='production'

# Adding gems
COPY Gemfile Gemfile
COPY Gemfile.lock Gemfile.lock
RUN bundle install --jobs 20 --retry 5 --without development test

# Adding project files
COPY . .
RUN bundle exec rake assets:precompile

EXPOSE 3000
CMD ["bundle", "exec", "puma", "-C", "config/puma.rb"]

default: &default
  adapter: postgresql
  encoding: unicode
  username: postgres
  password:
  pool: 5
  host: db

production:
  <<: *default
  database: app_name_production

version: '3'
volumes:
  postgres_data: {}

services:
  app:
    build:
      context: .
      dockerfile: ./docker/app/DockerFile
    depends_on:
      - db
  db:
    image: postgres
    volumes:
      - postgres_data:/var/lib/postgresql/data
  web:
    build:
      context: .
      dockerfile: ./docker/web/DockerFile
    depends_on:
      - app
    ports:
      - 80:80

# This is a template. Referenced variables (e.g. $RAILS_ROOT) need 
# to be rewritten with real values in order for this file to work. 

upstream rails_app {
  server app:3000;
}

server {
  # define your domain
  server_name www.example.com;

  # define the public application root
  root   $RAILS_ROOT/public;
  index  index.html;

  # define where Nginx should write its logs
  access_log $RAILS_ROOT/log/nginx.access.log;
  error_log $RAILS_ROOT/log/nginx.error.log;

  # deny requests for files that should never be accessed
  location ~ /\. {
    deny all;
  }

  location ~* ^.+\.(rb|log)$ {
    deny all;
  }

  # serve static (compiled) assets directly if they exist (for rails production)
  location ~ ^/(assets|images|javascripts|stylesheets|swfs|system)/ {
    try_files $uri @rails;

    access_log off;
    gzip_static on; # to serve pre-gzipped version

    expires max;
    add_header Cache-Control public;

    # Some browsers still send conditional-GET requests if there's a
    # Last-Modified header or an ETag header even if they haven't
    # reached the expiry date sent in the Expires header.
    add_header Last-Modified "";
    add_header ETag "";
    break;
  }

  # send non-static file requests to the app server
  location / {
    try_files $uri @rails;
  }

  location @rails {
    proxy_set_header  X-Real-IP  $remote_addr;
    proxy_set_header  X-Forwarded-For $proxy_add_x_forwarded_for;
    proxy_set_header Host $http_host;
    proxy_redirect off;
    proxy_pass http://rails_app;
  }
}

Create docker folder in app root 

-app_name
  -app
  -db
  -config
    -database.yml
  ...
  -docker
    -app
      -DockerFile
    -web
      -DockerFile
      -nginx.conf
  -docker-compose.yml

# Base image:
FROM nginx
# Install dependencies
RUN apt-get update -qq && apt-get -y install apache2-utils

# establish where Nginx should look for files
ENV RAILS_ROOT /var/www/app_name

# Set our working directory inside the image
WORKDIR $RAILS_ROOT

# create log directory
RUN mkdir log

# copy over static assets
COPY public public/

# Copy Nginx config template
COPY docker/web/nginx.conf /tmp/docker.nginx

# substitute variable references in the Nginx config template for real values from the environment
# put the final config in its place
RUN envsubst '$RAILS_ROOT' < /tmp/docker.nginx > /etc/nginx/conf.d/default.conf

EXPOSE 80

# Use the "exec" form of CMD so Nginx shuts down gracefully on SIGTERM (i.e. `docker stop`)
CMD [ "nginx", "-g", "daemon off;" ]