To read the full version of this content please select one of the options below:

Cost Savings for Inbound Freight: The Effects of Quantity Discounts and Transport Rate Breaks on Inbound Freight Consolidation Strategies

International Journal of Physical Distribution & Logistics Management

ISSN: 0960-0035

Article publication date: 1 September 1992

Abstract

Addresses a number of issues relating to determining whether products should be ordered independently and therefore shipped as a single‐product order, or co‐ordinated and shipped as a group, or multiproduct, order from a single source. Factors which might influence the decision include the level or volume of demand, the distribution of demand across products, the weight of items and the attractiveness of the quantity discount offered. Uses an optimal inventory‐theoretic model, that incorporates transport weight breaks and quantity discounts, to assess when product orders should be combined and what products should be ordered separately. The effects of these decisions on the order interval, the number of order groupings, the proportion of items ordered independently, the proportion of attractive discounts forgone in favour of consolidation, and the relative cost savings, are examined using an extensive set of simulated data that are based on a firm in the automobile industry supply chain.

Keywords

Citation

Russell, R.M. and Cooper, M.C. (1992), "Cost Savings for Inbound Freight: The Effects of Quantity Discounts and Transport Rate Breaks on Inbound Freight Consolidation Strategies", International Journal of Physical Distribution & Logistics Management, Vol. 22 No. 9, pp. 20-43. https://doi.org/10.1108/09600039210022961

Publisher

:

MCB UP Ltd

Copyright © 1992, MCB UP Limited