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A supply chain network design considering transportation cost discounts |
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| Authors: | Yu-Chung Tsao Jye-Chyi Lu |
| Affiliation: | a Sino-US Global Logistics Institute, Shanghai Jiao Tong University, Shanghai, China b Department of Business Management, Tatung University, Taipei, Taiwan, ROC c School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, GA, USA |
| Abstract: | This study addresses an integrated facility location and inventory allocation problem considering transportation cost discounts. Specifically, this article considers two types of transportation discounts simultaneously: quantity discounts for inbound transportation cost and distance discounts for outbound transportation cost. This study uses an approximation procedure to simplify DC distance calculation details, and develops an algorithm to solve the aforementioned supply chain management (SCM) problems using nonlinear optimization techniques. Numerical studies illustrate the solution procedures and the effects of the model parameters on the SCM decisions and total costs. Results of this study serve as a reference for business managers and administrators. |
| Keywords: | Continuous approximation Facility location allocation Inventory policy Supply chain network design Transportation cost discounts |
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