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The freight allocation problem with all-units quantity-based discount: A heuristic algorithm

  • Qin, Hu
  • Luo, Meifeng
  • Gao, Xiang
  • Lim, Andrew
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    This paper studies a problem encountered by a buying office for one of the largest retail distributors in the world. An important task for the buying office is to plan the distribution of goods from Asia to various destinations across Europe. The goods are transported along shipping lanes by shipping companies, which offer different discount rates depending on the freight quantity. To increase the reliability of transportation, the shipper imposes a quantity limit on each shipping company on each shipping lane. To guarantee a minimum business volume, each shipping company requests a minimum total freight quantity over all lanes if it is contracted. The task involves allocating projected demand of each shipping lane to shipping companies subject to the above conditions such that the total cost is minimized.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0305048311000892
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    Article provided by Elsevier in its journal Omega.

    Volume (Year): 40 (2012)
    Issue (Month): 4 ()
    Pages: 415-423

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    Handle: RePEc:eee:jomega:v:40:y:2012:i:4:p:415-423
    DOI: 10.1016/j.omega.2011.05.005
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    1. Goossens, D.R. & Maas, A.J.T. & Spieksma, F.C.R. & van de Klundert, J.J., 2007. "Exact algorithms for procurement problems under a total quantity discount structure," European Journal of Operational Research, Elsevier, vol. 178(2), pages 603-626, April.
    2. Chauhan, Satyaveer Singh & Proth, Jean-Marie, 2003. "The concave cost supply problem," European Journal of Operational Research, Elsevier, vol. 148(2), pages 374-383, July.
    3. Jiefeng Xu & Leonard Lu & Fred Glover, 2000. "The deterministic multi-item dynamic lot size problem with joint business volume discount," Annals of Operations Research, Springer, vol. 96(1), pages 317-337, November.
    4. Crama, Y. & Pascual J., R. & Torres, A., 2004. "Optimal procurement decisions in the presence of total quantity discounts and alternative product recipes," European Journal of Operational Research, Elsevier, vol. 159(2), pages 364-378, December.
    5. Xia, Weijun & Wu, Zhiming, 2007. "Supplier selection with multiple criteria in volume discount environments," Omega, Elsevier, vol. 35(5), pages 494-504, October.
    6. Benton, W. C. & Park, Seungwook, 1996. "A classification of literature on determining the lot size under quantity discounts," European Journal of Operational Research, Elsevier, vol. 92(2), pages 219-238, July.
    7. Chen, Frank Y. & Krass, Dmitry, 2001. "Analysis of supply contracts with minimum total order quantity commitments and non-stationary demands," European Journal of Operational Research, Elsevier, vol. 131(2), pages 309-323, June.
    8. Burke, Gerard J. & Carrillo, Janice & Vakharia, Asoo J., 2008. "Heuristics for sourcing from multiple suppliers with alternative quantity discounts," European Journal of Operational Research, Elsevier, vol. 186(1), pages 317-329, April.
    9. Schotanus, Fredo & Telgen, Jan & de Boer, Luitzen, 2009. "Unraveling quantity discounts," Omega, Elsevier, vol. 37(3), pages 510-521, June.
    10. Sawik, Tadeusz, 2010. "Single vs. multiple objective supplier selection in a make to order environment," Omega, Elsevier, vol. 38(3-4), pages 203-212, June.
    11. Chung, Chia-Shin & Hum, Sin-Hoon & Kirca, Omer, 1996. "The coordinated replenishment dynamic lot-sizing problem with quantity discounts," European Journal of Operational Research, Elsevier, vol. 94(1), pages 122-133, October.
    12. Rubin, Paul A. & Benton, W. C., 2003. "Evaluating jointly constrained order quantity complexities for incremental discounts," European Journal of Operational Research, Elsevier, vol. 149(3), pages 557-570, September.
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