Incorporating transportation costs into the single and multiple items newsvendor problems
Moncer Hariga, Mohammad Heydari, Mohammad Heydari, Mohammad Heydari
TL;DR
This paper explores how transportation costs affect inventory and truck fleet decisions in supply chains, showing that flexible truck usage can reduce costs.
Contribution
The paper introduces a new lower breakeven point for fixed transportation costs and proposes an optimal solution for multi-product shipping.
Findings
A lower breakeven point for fixed transportation costs was identified compared to prior research.
Using a mix of truck types can reduce overall supply chain costs.
Joint replenishment of multiple products improves truck capacity utilization and saves costs.
Abstract
The efficiency and responsiveness of supply chains are vitally dependent on inventory replenishment and transportation decisions. In this paper, we study a supply chain consisting of a single retailer ordering seasonal products within the newsvendor framework. The primary objective of the paper is to investigate the retailer’s decision-making process, aimed at determining the optimal replenishment quantities and selecting the appropriate mix and size of the truck fleet. Initially, we formulate a mathematical model where the retailer exclusively manages a limited fleet of its own trucks for inbound transportation of a single seasonal product. In this context, we determine a lower breakeven point for the fixed transportation cost than what has been previously proposed in the literature. Subsequently, we examine a commonly encountered transportation scenario where the retailer has the…
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Taxonomy
TopicsCommunity-based Tourism Development and Sustainability · Educational Research and Methods · Public Administration in Developing Nations