An Inventory Model With Two Truckload Transportation and Quantity Discounts

Transportation plays a vital role in the movement of raw materials and finished goods from one place to another. Trucks play a vital role in the movement of materials and are indispensable part of almost every shipment, both domestic and international. On the average, thirty-nine percent of the total logistics cost is spent on transportation. Therefore reducing the transportation cost may significantly reduce the total logistics cost. The total annual logistics cost considered in this research includes ordering cost, material cost, transportation cost and inventory holding cost. The main objective of this research is to develop algorithms for finding the optimal ordering quantity that minimizes total annual logistics cost, when the suppliers offer No quantity discounts All-unit quantity discounts Incremental quantity discounts This research considers truckload transportation where two truck sizes are available. The algorithm developed in this research will identify the optimum ordering quantity and the optimum number of trucks required to ship the ordering quantity. MATLAB programming of the algorithm will analyze the factors that affect that the total annual logistics cost