Incorporating transportation costs into supplier selection and orderquantity allocation

Abraham Mendoza, Jose Antonio Ventura

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Typical supplier selection and order quantity allocation decisions are concerned with obtaining the optimal inventory policy that simultaneously determines how much, how often, and from which suppliers to order. In doing so typical inventory costs (setup, holding, and purchasing) are considered. However, a relevant cost that has been repeatedly overlooked in this type of decisions is the transportation cost. For this reason, this research proposes a mathematical model that not only considers typical inventory costs but also transportation costs to determine the optimal order allocation to selected suppliers. Since actual transportation freight rates are neither continuous nor convex, this research proposes the use of two continuous functions to emulate the actual freight rates and obtain near-optimal solutions. These two functions are easy to implement and do not increase the complexity of the mathematical model.

Original languageEnglish (US)
Title of host publicationIIE Annual Conference and Expo 2008
Pages1142-1147
Number of pages6
StatePublished - 2008
EventIIE Annual Conference and Expo 2008 - Vancouver, BC, Canada
Duration: May 17 2008May 21 2008

Other

OtherIIE Annual Conference and Expo 2008
CountryCanada
CityVancouver, BC
Period5/17/085/21/08

All Science Journal Classification (ASJC) codes

  • Computer Science Applications
  • Software
  • Industrial and Manufacturing Engineering

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