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Quantity discount with freight consolidation

Author

Listed:
  • Nguyen, H.N.
  • Rainwater, C.E.
  • Mason, S.J.
  • Pohl, E.A.

Abstract

We study an integrated quantity discount and vehicle routing problem where truck utilization is increased by building multi-stop routes and increasing order sizes through a purchase incentive. We model the problem and prove it to be NP-hard. Our experiments show that commercial solvers do not effectively solve instances with more than ten buyers. We propose the use of non-compromising route elimination rules and other improvement techniques for a route-based formulation. Our experimentation suggests that a cost savings of 18% can be realized by utilizing our model.

Suggested Citation

  • Nguyen, H.N. & Rainwater, C.E. & Mason, S.J. & Pohl, E.A., 2014. "Quantity discount with freight consolidation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 66(C), pages 66-82.
    • Handle: RePEc:eee:transe:v:66:y:2014:i:c:p:66-82
    DOI: 10.1016/j.tre.2014.03.004
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    References listed on IDEAS

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    Cited by:

    1. Julio Montecinos & Mustapha Ouhimmou & Satyaveer Chauhan & Marc Paquet & Ali Gharbi, 2021. "Transport carriers’ cooperation on the last-mile delivery in urban areas," Transportation, Springer, vol. 48(5), pages 2401-2431, October.
    2. Manerba, Daniele & Mansini, Renata & Perboli, Guido, 2018. "The Capacitated Supplier Selection problem with Total Quantity Discount policy and Activation Costs under uncertainty," International Journal of Production Economics, Elsevier, vol. 198(C), pages 119-132.
    3. Pascual, Rodrigo & Santelices, Gabriel & Lüer-Villagra, Armin & Vera, Jorge & Cawley, Alejandro Mac, 2017. "Optimal repairable spare-parts procurement policy under total business volume discount environment," Reliability Engineering and System Safety, Elsevier, vol. 159(C), pages 276-282.
    4. Gahm, Christian & Brabänder, Christian & Tuma, Axel, 2017. "Vehicle routing with private fleet, multiple common carriers offering volume discounts, and rental options," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 97(C), pages 192-216.
    5. Qiu, Xuan & Lee, Chung-Yee, 2019. "Quantity discount pricing for rail transport in a dry port system," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 563-580.

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