Abstract
In this study, we analyze the replenishment decision of a buyer with the objective of maximizing total expected profits. the buyer faces stepwise freight costs in inbound transportation and a hybrid wholesale price schedule given by a combination of all-units discounts with economies and diseconomies of scale. This general cost structure enables the model and the proposed solution to be also used for the supplier selection of a buyer under the single sourcing assumption. We show that the buyers replenishment problem reduces to finding and comparing the solutions of the following two subproblems: (i) a replenishment problem involving wholesale prices given by an all-units discount schedule with economies of scale and a lower bound on the replenishment quantity, and (ii) a replenishment problem involving wholesale prices given by an all-units discount schedule with diseconomies of scale and an upper bound on the replenishment quantity. We propose solution methods for these two subproblems, each of which stands alone as practical problems, and utilize these methods to optimally solve the buyer's replenishment problem. © 2012 Elsevier B.V. All rights reserved.
Recommended Citation
D. Konur and A. Toptal, "Analysis and Applications of Replenishment Problems under Stepwise Transportation Costs and Generalized Wholesale Prices," International Journal of Production Economics, vol. 140, no. 1, pp. 521 - 529, Elsevier, Nov 2012.
The definitive version is available at https://doi.org/10.1016/j.ijpe.2012.07.003
Department(s)
Engineering Management and Systems Engineering
Keywords and Phrases
Cargo capacity; Newsvendor model; Premium schedule; Supplier selection; Transportation
International Standard Serial Number (ISSN)
0925-5273
Document Type
Article - Journal
Document Version
Citation
File Type
text
Language(s)
English
Rights
© 2024 Elsevier, All rights reserved.
Publication Date
01 Nov 2012
