Abstract
This chapter studies two valuable contributions in the literature regarding extensions of the traditional economic order quantity model. In particular, a base theoretical model for a single-stage system over the infinite horizon and two modes of transportation is presented. The transportation options are truckload transportation with fixed cost per truck, less than truckload transportation with a constant cost per unit shipped, or a combination of both modes simultaneously. Then, an extension of this model to include the all-units quantity discount scheme is studied. Exact algorithms are proposed for computing optimal policies for each case.
Keywords
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Abad PL, Aggarwal V (2005). Incorporating transport cost in the lot size and pricing decisions with downward sloping demand. International Journal of Production Economics 95:297–305.
Abdelwahab W, Sargious M (1992). Freight rate structure and optimal shipment size in freight transportation. Logistics and Transportation Review 26:271–292.
Aucamp DC (1982). Nonlinear freight costs in the EOQ problem. European Journal of Operational Research 9:61–63.
Baumol WJ, Vinod HD (1970). An inventory theoretic model of freight transport demand. Management Science 16(7):413–421.
Benton W, Park S (1996). A Classification of literature on determining the lot size under quantity discounts. European Journal of Operational Research 92:219–238.
Burwell TH, Dave DS, Fitzpatrick KE, Roy MR (1997). Economic lot size model for price-dependent demand under quantity and freight discounts. International Journal of Production Economics 48:141–155.
Carter JR, Ferrin BG (1996). Transportation costs and inventory management: Why transportation costs matter. Production and Inventory Management Journal 37(3):58–62.
Chan L, Muriel A, Shen Z, Simchi-Levi D, Teo C (2002a). Effective zero-inventory ordering policies for the single-warehouse multiretailer problem with piecewise linear cost structures. Management Science 48:1446–1460.
Chan L, Muriel A, Shen Z, Simchi-Levi D (2002b). On the effectiveness of zero-inventory ordering policies for the economic lot-sizing model with a class of piecewise linear cost structures. Operations Research 50:1058–1067.
Hadley G, Whitin T (1963). Analysis of inventory systems. Prentice Hall, Englewood Cliffs.
Harris F (1913) How many parts to make at once. Factory, The Magazine of Management 10(2):135–136.
Hu J, Munson CL (2002). Dynamic demand lot-sizing rules for incremental quantity discounts. Journal of the Operational Research Society 53:855–863.
Hu J, Munson CL, Silver EA (2004). A modified silver-meal heuristic for dynamic lot sizing under incremental quantity discounts. Journal of the Operational Research Society 55:671–673.
Hwang H, Moon DH, Shinn SW (1990). An EOQ model with quantity discounts for both purchasing price and freight cost. Computers and Operations Research 17(1):73–78.
Iwaniec K (1979). An inventory model with full load ordering. Management Science 25(4):374–384.
Jaruphongsa W, Centinkaya S, Lee CY (2007). Outbound shipment mode considerations for integrated inventory and delivery lot-sizing decisions. Operations Research Letters 35:813–822.
Konur D, Toptal A (2012). Analysis and applications of replenishment problems under stepwise transportation costs and generalized wholesale prices. International Journal of Production Economics 140:521–529.
Krichen S, Laabidi A, Abdelaziz FB (2011). Single supplier multiple cooperative retailers inventory model with quantity discount and permisible delay in payments. Computers & Industrial Engineering 60:164–172.
Lee CY (1986) The economic order quantity for freight discount costs. IIE Transactions 18(3):318–320.
Lee CY (1989). Solution to the multiple set-up problem with dynamic demand. IIE Transactions 21:266–270.
Lee CY, Cetinkaya S, Jaruphongsa W (2003). A dynamic model for inventory lot sizing and outbound shipment scheduling at a third-party warehouse. Operations Research 51:735–747.
Li CL, Hsu VN, Xiao WQ (2004). Dynamic lot sizing with batch ordering and truckload discounts. Operations Research 52: 639–654.
Lippman SA (1969). Optimal inventory policy withmultiple set-up costs. Management Science 16(1):118–138.
Lippman SA (1971). Economic order quantities and multiple set-up costs. Management Science 18(1):39–47.
Mendoza A, Ventura JA (2008). Incorporating quantity discounts to the EOQ model with transportation costs. International Journal of Production Economics 113:754–765.
Muckstadt JA, Sapra A (2009). Principles of inventory management: when you are down to four order more. Springer, New York.
Munson CL, Hu J (2010). Incorporating quantity discounts and their inventory impacts into centralized purchasing decisions. European Journal of Operational Research 201:581–592.
Munson CL, Rosenblatt M (2001) Coordinating a three-level supply chain with quantity discounts. IIE Transactions 33:371–384.
Nahmias S (1997). Production and operations analysis (Third Edition). Irwin/McGraw-Hill, New York.
Rieksts BQ, Ventura JA (2008). Optimal inventory policies with two modes of freight transportation. European Journal of Operational Research 186:576–585.
Rieksts BQ, Ventura JA (2010). Two-stage inventory models with a bi-modal transportation cost. Computers & Operations Research 37:20–31.
Silver EA, Pyke DF, Peterson R (1998). Inventory Management and Production Planning and Scheduling. John Wiley and Sons, Hoboken, NJ.
Swenseth SR, Godfrey MR (2002). Incorporating transportation costs into inventory replenishment decisions. International Journal of Production Economics 77:113–130.
Toptal A, Bingöl SO (2011). Transportation pricing of a truckload carrier. European Journal of Operational Research 214:559–567.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2014 Springer Science+Business Media New York
About this chapter
Cite this chapter
Mendoza, A., Ventura, J.A. (2014). EOQ Models with Two Modes of Freight Transportation and All-Units Quantity Discounts. In: Choi, TM. (eds) Handbook of EOQ Inventory Problems. International Series in Operations Research & Management Science, vol 197. Springer, Boston, MA. https://doi.org/10.1007/978-1-4614-7639-9_7
Download citation
DOI: https://doi.org/10.1007/978-1-4614-7639-9_7
Published:
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4614-7638-2
Online ISBN: 978-1-4614-7639-9
eBook Packages: Business and EconomicsBusiness and Management (R0)