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

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  • Qin, Hu
  • Luo, Meifeng
  • Gao, Xiang
  • Lim, Andrew

Abstract

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.

Suggested Citation

  • Qin, Hu & Luo, Meifeng & Gao, Xiang & Lim, Andrew, 2012. "The freight allocation problem with all-units quantity-based discount: A heuristic algorithm," Omega, Elsevier, vol. 40(4), pages 415-423.
    • 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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    2. Li, Zhaolin & Ou, Jinwen & Liang, Guitian, 2021. "Optimizing hospital drug procurement with rebate contracts," Omega, Elsevier, vol. 105(C).
    3. Jose L. Andrade-Pineda & David Canca & Pedro L. Gonzalez-R, 2017. "On modelling non-linear quantity discounts in a supplier selection problem by mixed linear integer optimization," Annals of Operations Research, Springer, vol. 258(2), pages 301-346, November.
    4. Han, Xiaoya & Yu, Yugang & Hu, Guiping, 2019. "A dynamic newsvendor problem with goodwill-dependent demands and minimum commitment," Omega, Elsevier, vol. 89(C), pages 242-256.
    5. Zhang, Li-Hao & Liu, Chunxiao & Zhang, Cheng & Wang, Shanshan, 2023. "Upstream encroachment and downstream outsourcing in competing shipping supply chains," International Journal of Production Economics, Elsevier, vol. 255(C).
    6. Saraeian, Shideh & Shirazi, Babak & Motameni, Homayun, 2019. "Adaptive control of criticality infrastructure in automatic closed-loop supply chain considering uncertainty," International Journal of Critical Infrastructure Protection, Elsevier, vol. 25(C), pages 102-124.
    7. McDonald, Conor M., 2016. "Integrating packaging and supply chain decisions: Selection of economic handling unit quantities," International Journal of Production Economics, Elsevier, vol. 180(C), pages 208-221.
    8. Kowalski, Krzysztof & Lev, Benjamin & Shen, Wenjing & Tu, Yan, 2014. "A fast and simple branching algorithm for solving small scale fixed-charge transportation problem," Operations Research Perspectives, Elsevier, vol. 1(1), pages 1-5.
    9. Lafkihi, Mariam & Pan, Shenle & Ballot, Eric, 2019. "Freight transportation service procurement: A literature review and future research opportunities in omnichannel E-commerce," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 348-365.
    10. Zhou, Yuan & Xie, Jinxing, 2014. "Potentially self-defeating: Group buying in a two-tier supply chain," Omega, Elsevier, vol. 49(C), pages 42-52.

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