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An analysis of mode choice for shippers in a constrained network with applications to just-in-time inventory

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  • Benjamin, Julian

Abstract

The process of choosing a mode of transport for the distribution of materials by a shipper is analyzed in terms of setup, inventory, and order costs as well as the usual cost of hauling. Capacity and requirements constraints are also considered. The procedure is further extended to include transshipment warehouses and concave transport costs. The problem is formulated as a nonlinear program and local optimal solutions are found for each problem using GINO, a generalized reduced gradient algorithm. The nonlinear programs are also solved using a decomposition procedure. It is found that the choice of mode has implications for shipping patterns throughout the network. In particular, adoption of special shipping strategies, such as the just-in-time (JIT) inventory policy, depend on the comparative total costs for each link in the network. When the shipping strategy is JIT, the cost of production at the demand point must also be considered. It is suggested that total cost of shipping, storage, and production be the decision criterion wherever shipping options are available and that costs for an entire network be considered when transport decisions are made.

Suggested Citation

  • Benjamin, Julian, 1990. "An analysis of mode choice for shippers in a constrained network with applications to just-in-time inventory," Transportation Research Part B: Methodological, Elsevier, vol. 24(3), pages 229-245, June.
    • Handle: RePEc:eee:transb:v:24:y:1990:i:3:p:229-245
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    Cited by:

    1. Elias Olivares-Benitez & José González-Velarde & Roger Ríos-Mercado, 2012. "A supply chain design problem with facility location and bi-objective transportation choices," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 20(3), pages 729-753, October.
    2. Thomas, Douglas J. & Griffin, Paul M., 1996. "Coordinated supply chain management," European Journal of Operational Research, Elsevier, vol. 94(1), pages 1-15, October.
    3. Tang, Shao-Long & Yan, Hong, 2010. "Pre-distribution vs. post-distribution for cross-docking with transshipments," Omega, Elsevier, vol. 38(3-4), pages 192-202, June.
    4. Hamedi, Maryam & Zanjirani Farahani, Reza & Husseini, Mohammad Moattar & Esmaeilian, Gholam Reza, 2009. "A distribution planning model for natural gas supply chain: A case study," Energy Policy, Elsevier, vol. 37(3), pages 799-812, March.
    5. L Lei & Q Wang & C Fan, 2006. "Optimal business policies for a supplier–transporter–buyer channel with a price-sensitive demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(3), pages 281-289, March.
    6. Eskigun, Erdem & Uzsoy, Reha & Preckel, Paul V. & Beaujon, George & Krishnan, Subramanian & Tew, Jeffrey D., 2005. "Outbound supply chain network design with mode selection, lead times and capacitated vehicle distribution centers," European Journal of Operational Research, Elsevier, vol. 165(1), pages 182-206, August.
    7. Erdem Eskigun & Reha Uzsoy & Paul V. Preckel & George Beaujon & Subramanian Krishnan & Jeffrey D. Tew, 2007. "Outbound supply chain network design with mode selection and lead time considerations," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(3), pages 282-300, April.

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